US Economic Aid in Egypt: Strategies for Democratisation and Reform in the Middle East 9781350989641, 9780857728104

Economic aid is one of the cornerstones of the Egyptian-American relationship, and plays a significant role in promoting

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Table of contents :
Cover
Author Bio
Endorsements
Title
Copyright
Dedication
Contents
List of Tables
Acknowledgements
List of Abbreviations
Introduction
1. Creating the Macro-Environment for ‘Stability and Growth’ that Integrates a Globalising ‘Warm Peace’
2. Privatisation and ‘Peace’ by Partner Allies: Alignment and Oppositional Critiques
3. Qualified Industrial Zones and Natural Gas: Remapping the Economy for ‘Warm Peace’
4. Discourses on Civil Society, Citizenship and Nationalism in the Emerging ‘Market Democracy’
Conclusion
Appendix
Notes
Bibliography
Index
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US Economic Aid in Egypt: Strategies for Democratisation and Reform in the Middle East
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Dina Jadallah is a lecturer of Arabic Language and Society in the Middle East Studies Program at the University of Southern California. She holds a PhD from the School of Near Eastern and North African Studies at the University of Arizona. She is the author of numerous articles dealing with political developments in the Arab world, which have appeared in Arab Studies Quarterly, Jadaliyya, Middle East Journal, Palestine Chronicle, Counterpunch, and Mathal/Mashal among others.

‘This is the most effective and most credible critique of US economic aid to Egypt. This book will be of great interest to all those fascinated by the true agenda of US foreign policy in the Middle East. It is thoroughly documented and persuasively argued, it constitutes a significant addition to the scholarly literature on Egypt and on US foreign policy. The author exercises a critical judgment on the economic program and is free of the conventional wisdom and cliche´s that fill the literature on the subject. It is the most important book on the subject in years, many years. Anyone who wishes to distinguish between fact and fiction in US foreign policy toward the Middle East should read this book.’ Professor As’ad AbuKhalil, Department of Political Science, California State University, Stanislaus ‘This is an important contribution to understanding how a transnational coalition of US and Egyptian elites has channelled US aid toward a restructuring of the Egyptian state for geostrategic and economic objectives. In this process, US aid has served to enrich a minority of wellconnected domestic and transnational actors while helping to maintain an oppressive, oligarchic and exploitative government that marginalizes Egyptian civil society. The contribution is timely, well-argued and filled with detailed empirical support. Highly recommended!’ Ronald W. Cox, Professor and Associate Chair, Department of Politics and International Relations, Florida International University

US ECONOMIC AID IN EGYPT Strategies for Democratisation and Reform in the Middle East

DINA JADALLAH

Published in 2016 by I.B.Tauris & Co. Ltd London • New York www.ibtauris.com Copyright q 2016 Dina Jadallah The right of Dina Jadallah to be identified as the author of this work has been asserted by the author in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. Except for brief quotations in a review, this book, or any part thereof, may not be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. References to websites were correct at the time of writing. International Library of Economics 9 ISBN: 978 1 78453 255 0 eISBN: 978 0 85772 891 3 ePDF: 978 0 85772 810 4 A full CIP record for this book is available from the British Library A full CIP record is available from the Library of Congress Library of Congress Catalog Card Number: available Typeset in Garamond Three by OKS Prepress Services, Chennai, India Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY

This book is dedicated with the deepest love and appreciation to my parents, Samia and Mousa Jadallah.

CONTENTS

List of Tables Acknowledgements List of Abbreviations Introduction 1. Creating the Macro-Environment for ‘Stability and Growth’ that Integrates a Globalising ‘Warm Peace’ 2. Privatisation and ‘Peace’ by Partner Allies: Alignment and Oppositional Critiques 3. Qualified Industrial Zones and Natural Gas: Remapping the Economy for ‘Warm Peace’ 4. Discourses on Civil Society, Citizenship and Nationalism in the Emerging ‘Market Democracy’ Conclusion Appendix Notes Bibliography Index

ix xi xv 1 31 81 150 200 244 257 261 341 370

LIST OF TABLES

Table 1.1. Aid to Egypt 1995–2010, historical (US$ million)

45

Table 1.2. Economic assistance to Egypt by the DOS and USAID, 2006–10 (US$)

47

Table 1.3. US aid disbursement by sector, 2000– 10 (US$)

49

Table 1.4. Economic assistance by implementing partner, 2000–9 (US$)

57

Table 2.1. General statistics, Egypt, 1995 –2010

97

Table 2.2. Imports and exports according to the Central Agency for Public Mobilization and Statistics, Egypt, 2001–10 (LE)

101

Table 2.3. Privatised companies in Egypt, 1988– 99 (US$ million)

103

Table 2.4. Privatised companies in Egypt, 2000– 8 (US$ million)

114

Table 2.5. Egypt: exports to USA from 2001 to 2010 by commodity sectors (LE million)

140

Table 2.6. Egypt: imports from USA from 2001 to 2010 by commodity sectors (LE)

141

Table 2.7. US goods trade with Egypt (US$ billion)

145

Table 2.8. US trade in goods with Egypt (nominal US$ million) 146

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Table 3.1. Egypt exports to Israel, 2001– 10 by commodity sectors (LE million)

159

Table 3.2. Israel– Egypt trade (US$ million)

161

Table 3.3. Trade since the QIZ Protocol, value (US$ million)

162

Table 3.4. Egypt: balance of payments, from 1990/91 to 1992–2010, selected data (US$ million)

166

Table 3.5. Egypt’s total exports and imports, 2001– 10 (LE million)

168

Table 3.6. Total Egypt exports, 1999– 2011 (US$ billion)

169

Table 3.7. Total Egypt imports, 1999–2011 (US$ billion)

170

Table 3.8. QIZ data – imports/exports (US$ million)

173

Table 3.9. Egypt imports from Israel by commodity sectors, 2001–10 (LE million)

175

ACKNOWLEDGEMENTS

It is with deep humility that I express my appreciation and gratitude to the many people who helped me along the way and who provided insightful comments and constructive criticism on my book. I wish to take this opportunity to acknowledge the generous contributions of my professors. Dr Yaseen Noorani threw me a life jacket when I sorely needed it, asked the hardest questions, spent lengthy hours reading my work and provided painstaking guidance. I benefited greatly from discussions with Dr David Gibbs, who kindly shared his considerable intellectual energy, time, knowledge and sharply critical observations on history and international relations. Dr Maha Nassar generously gave of her expertise on Middle East history and politics and took time out from her busy schedule to share incisive advice on the initial proposal as well as the finished book. I also wish to thank Dr Scott Lucas for his kindness, his valuable perspective and for his always welcome humour. Before going to Egypt, Dr Mounzir Suleiman and Jafar Jafari helped me gain access to resources and to Egyptian writers and experts. Once in Egypt, friends and family were generous beyond words, with their time, their love, their laughter, their thoughtprovoking discussions, their encouragement and their contacts! I extend special thanks to Magda Kelada, Mervat Khairallah, Sherif ‘Abd el-Khalek, Wafaa Mansour, Nazli Islam and Nevine Kashmiry. I am forever in their debt. Developing a critical work that conveys the sophistication and insights of Egyptian debates regarding US economic aid would not have

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been possible without the help of many experts, writers, activists and economists. I am grateful for their magnanimous contributions to my knowledge and research. Dr Ahmed al-Sayyed al-Naggar very graciously agreed to meet me without a prior appointment, then proceeded to share his invaluable critical analyses of Egyptian economic issues, including the uses and abuses of economic reforms. Dr ‘Imad Gad directed me to the best resources on Egyptian debate regarding relations with Israel. I wish to extend sincere thanks to Ahmed Abu Zeid for spending hours patiently explaining to me the processes of implementing (or not) business and economic reforms, of privatisation and of the institutionalised aspects of economic transformations. Dr Rif‘at Sayyed Ahmed discussed at great length the political, economic, cultural and ethical dimensions of Egyptian debates against Zionism. Dr Dina Shehata welcomed me into her home, shared her expert knowledge and directed me to valuable resources. Dr Hazem el-Beblawy very graciously invited me into his home and discussed the finer points of the economic relationships between the Mubarak regime, US aid and the challenges of economic reforms in Egypt. Dr Saad Eddin Ibrahim convivially and expertly discussed experiences during the uneven process of political reforms under Mubarak. I am grateful to Kamal ‘Abbas and Kamal Khalil for informing me at length about labour and agricultural activism. I also wish to thank Ghada Shahbandar for her insights into human rights organisational efforts and other forms of activism, as well as for providing an invaluable critique of the actual execution of American aid-funded policies. And, I am grateful to Judge Tahani al-Gebali for her refreshing and sharply critical discussion of the contemporary political discourse on reforms and on Arabism. I wish to thank my editor, Azmina Siddique, for working diligently and responsively to ensure that this book comes to print and is a quality product. I also thank my initial editor, Maria Marsh, for believing in this work. I am also very grateful to my copy editor, Pat Fitzgerald, for expertly and efficiently helping me polish the manuscript. I am grateful to the talented Karim Mansour for letting me use his powerful photograph as a cover for my book. I wish to thank my loving friends and family, who for years supported me in my efforts. I extend my deepest gratitude to Gene Flood who has

ACKNOWLEDGEMENTS

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been a constant source of support, encouragement and cheer. Finally, my parents, Samia Mansour and Mousa Jadallah, taught me by example to always question prevailing orthodoxy and to challenge myself. Their presence enriches my life and I could never thank them enough for their seemingly endless love, support and guidance.

LIST OF ABBREVIATIONS

ACC ATA BINGO BOT CAPMAS CGE CIPE COMESA CSO DONGO ECC ECES EGAS EITP EMG EOHR ERSAP ESF EU FDI FEI GAFI GATT GDP

American Chamber of Commerce Anti-terrorism Assistance business interest NGO build-operate-transfer Central Agency for Public Mobilisation and Statistics computable general equilibrium Center for International Private Enterprise Common Market for East and South Africa civil society organisation donor organised NGO Egyptian Chambers of Commerce Egyptian Center for Economic Studies Egyptian Natural Gas Company Egyptian International Trade Point East Mediterranean Gas Egyptian Organization for Human Rights Economic Reform and Structural Adjustment Program Economic Support Fund European Union foreign direct investment [Egyptian] Federation of Industries General Authority for Investment General Agreement on Tariffs and Trade gross domestic product

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GINI GNP GoE GONGO IEC IFC IFI IMF IO IR IRI MOU NADR NAM NATO NDI NDP NED NGO PCSU PEMA PINGO PPP QIZ QUANGO R&D SMEs SOE UAE UNCTAD UNDP USAID WAIPA WB WTO

US ECONOMIC AID IN EGYPT

general index of national inequality gross national product Government of Egypt ‘governmental’ NGO Israeli Electrical Corporation International Financing Corporation international financial institution International Monetary Fund international organisation international relations International Republican Institute Memorandum of Understanding Nonproliferation, Anti-terrorism, Demining and Related Programs Non-Alignment Movement North Atlantic Treaty Organization National Democratic Institute National Democratic Party National Endowment for Democracy non-governmental organisation Privatisation Coordination Support Unit Center for Policy Evaluation and Macroeconomic Analysis public interest NGO purchasing power parity Qualified Industrial Zones quasi-governmental NGO research and development small and medium-sized businesses state-owned enterprise United Arab Republics United Nations Conference on Trade and Development United Nations Development Program United States Agency for International Development World Association of Investment Promotion Agencies World Bank World Trade Organization

INTRODUCTION

The idea of writing a book that is critical of the reigning orthodoxy that extols the role of US aid in promoting economic and political progress came from the need to explain a contradictory experience in Egypt under President Mubarak. I decided to evaluate US economic aid by juxtaposing its narrative framework of seeking to promote democracy and free markets against its aim of achieving specific strategic goals in the region as well as within the context of significant discourses in Egypt debating the reform processes undertaken within the aid framework. Starting in the early 1990s, the American foreign policy establishment, as well as Democratic and Republican presidents, embraced the idea that traditional geopolitical power politics is dead.1 Henceforth, it was asserted, the world order would be increasingly institutionalised, democratic, globalised and market-driven. At the centre of the new order is the concept of market democracy, in which the United States encourages and induces world change by promoting democracy, free markets and human rights. These ideas of how best to extend and project American power around the world build on the theme of an ‘Open Door’, which came to dominate American foreign policy in the early twentieth century. Open Door policies allowed America’s preponderant economic strength to enter and dominate other parts of the world. As such, they represented a more sophisticated approach to imperialism than the traditional empire building of Europe. Adapted for the present, democracy, free markets and human rights were the essential components that would purportedly build an emergent norm of international cooperation for the greater global good.

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In the prevailing triumphalism, a few prominent neorealist political scientists, like Stephen M. Walt, disputed both claims, challenging the veracity of the notion that traditional geopolitical competition is dead as well as the benevolence of the project.2 John Mearsheimer argued convincingly that there are real limits to the extension of the United States’ hegemonic power.3 Christopher Layne noted that the liberal institutionalism of Wilsonian ‘peace’ in the early twentieth century had strategic goals which are pre-requisites for the ideological and economic ‘openness’ that were promoted in ‘Open Door’ policies.4 He showed that, at least since the 1940s, the US sought raw power dominance and a Gramscian hegemony that targets intellectual and moral worldviews. Thus, successive administrations linked American ‘core values’ with the distribution of power in the international system, economic expansion of free markets and openness to American liberal ideology. Consequently, the protection of core values necessitated the extension of US-defined security to the whole world. This was especially the case in the Middle East because of its oil deposits and strategic location.5 Likewise, Chalmer Johnson posited that policies promoting democracy, globalisation and neoliberal economic policies6 are part of the United States’ quest for centrality and power.7 Among the prime instruments used by the United States to transform the world (and extend its power) is the provision of economic aid.8 An altruistic narrative for the provision of aid holds that it advances American foreign policy goals, incentivising desired behaviours and policies in other states by spreading values of freedom and liberal ideals like (Kantian) peace and democracy internationally, while convincing states to stay in the US orbit.9 Because the Middle East region was and is of prime American interest, it has consistently been the object of much US diplomacy, aid, trade and military intervention. Egypt is the second largest recipient of US aid. Many reasons render it of prime interest to the United States. Egypt is an anchor for US foreign policy in the Middle East. Historically, politically and culturally Egypt possesses regional weight, making it central to the projection of US power in the region and to the protection of the United States’ main strategic interests in oil (priced in dollars).10 Egypt is also the world’s largest importer of wheat – usually from the United States. Of primary strategic importance to the United States in Egypt are maintaining peace with Israel, economic goals for a market economy and military and foreign policy cooperation for US objectives in the region.11

INTRODUCTION

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A policy brief to Congress by the Congressional Research Service enumerated the following US interests in Mubarak’s Egypt: A primary US interest in continued good relations with Egypt is to capitalize on Egypt’s historic leadership role in the Arab world. Often, other Arab states look to Egypt to initiate action or set an example on regional problems. For example, in the past, other Arab states followed the Egyptian lead in turning to the Soviet Union for weapons, in nationalizing foreign interests, in land reform programs, in introducing democratic institutions, and in many other areas. In a current example, the United States appreciates Egypt’s active opposition to terrorism and welcomes Egyptian influence in convincing other Arab states to cooperate in the war on terrorism.12 Other US interests include: Egypt’s moderate voice in Arab councils and the US’s reliance upon Egypt to persuade less moderate Arab states of the wisdom of compromise. President Mubarak serves as a conduit carrying the various peace proposals among the Syrian, Lebanese, US, Israeli, Jordanian, and Palestinian negotiators and has counseled leaders of Libya, Sudan, and Iraq. A third US interest is to maintain the Egyptian – Israeli peace treaty. A fourth reason for maintaining good US– Egyptian relations is defense cooperation in opposing threats or aggression against regional friends, as was demonstrated in Egypt’s active participation in the 1991 liberation of Kuwait and in Egypt’s military cooperation with US forces in the 2003 invasion of Iraq. Cooperation between US and Egyptian armed forces in joint military exercises over the previous decade (the ‘Bright Star’ exercises) prepared the way for the 1990– 1991 defense of the Arabian Peninsula (‘Operation Desert Storm’).13 Even after the events of 25 January 2011 which toppled President Hosni Mubarak, and despite the turmoil in current relations with the US following the ousting of President Mohammed Morsi, Egypt remains a key component in US Middle East policy.14 President Barack Obama emphasised the importance of US – Egypt relations, saying: ‘This is a

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partnership that’s been very important to us, in part because of the peace treaty with Israel and the work that’s been done to deal with the Sinai.’15 Former House Majority Leader Eric Cantor (Republican) insisted that: Egypt’s stability is tremendously important for America’s national security and for the security of our allies in the Middle East [. . .] The Egyptian military has long been a key partner of the United States and a stabilizing force in the region, and is perhaps the only trusted national institution in Egypt today.16 In fact, Egypt is key to the US military presence in the region. According to the US Central Command, more than 2,000 military aircraft flew through Egyptian airspace in support of missions in Afghanistan and the Middle East region, and according to the US Fifth Fleet based in Bahrain, about 35 – 45 naval ships pass through the Suez Canal (expedited passage) annually, including carrier strike groups.17 Moreover, Egypt is also important to the United States’ global free markets objectives, since 12 per cent of international trade and 22 per cent of the container trade pass through the Suez Canal.18 More broadly, Egypt is the most populated Arab country, with Egyptians accounting for about a quarter of all Arabs. For all the above reasons, Egypt is a compelling case in which to test the extension of this ‘new order’ using aid. Even though aid is a cornerstone of the Egyptian – American relationship, there is little research about the role that aid plays in achieving US policy objectives. The important question of how aid helps achieve policy alignment – politically, economically and intellectually – within the American orbit is rarely asked. Moreover, how does the stipulation of producing a ‘warm peace’ with Israel (also known as normalisation of relations with Israel – ‘normalisation’ for short) impact the economic and structural processes of creating the American vision of ‘market democracy’ in Egypt?19 Despite the aid, normalisation (tatbi‘) remains an intensely contested issue in Egypt and the rest of the Arab world. Another understudied question is how the stipulation to normalise relations with Israel affected Egyptian assessments of the outcomes associated with alignment into the American orbit. It is important to put aid in perspective. US aid actually represents a tiny portion of the Egyptian economy: it was about 4 per cent of GDP

INTRODUCTION

5

(gross domestic product) in 1995 and only 1.3 per cent of GDP in 2010.20 The non-military portions of this aid constitute even smaller ratios of GDP. So what explains its strong effects on the Egyptian government and its policies? Aid is not a stand-alone instrument. It functions as both a complement to political and military tools and a doorway for access to other sources of global aid within the US-dominated international system. These include international financial institutions (IFIs) as well nongovernmental organisations (NGOs) and so forth.21 As the chapters on privatisation and territorial reconceptualisation will argue, eased access to aid and financial resources translated into easier redirection of resource benefits and strategic re-orientation.22 Access to aid-enabled financial resources requires compliance. But compliance with what specifically? For US aid to be renewed, Congress requires that the US Secretary of State certify that Egypt complies with the Egyptian– Israeli Peace treaty. Thus, aid is conditional on peace with Israel. According to a 2009 US Embassy cable released through WikiLeaks, former US Ambassador to Egypt Margaret Scobey wrote: President Mubarak and military leaders view our military assistance program as the cornerstone of our mil-mil relationship and consider the USD 1.3 billion in annual FMF as ‘untouchable compensation’ for making and maintaining peace with Israel. The tangible benefits to our mil-mil relationship are clear: Egypt remains at peace with Israel, and the US military enjoys priority access to the Suez Canal and Egyptian airspace.23 For the peace to be ‘normal’, the relationship is to include ‘full recognition, diplomatic, economic and cultural relations, termination of economic boycotts and discriminatory barriers to the free movement of people and goods, and will guarantee the mutual enjoyment by citizens of the due process of law’.24 One example of how US aid was used to foster a warmer peace that would be embraced beyond the regime is the Middle East Regional Cooperation (Merc) Program. Merc has ‘supported Arab and Israeli researchers working together toward development and peace in the Middle East and North African region’ since 1981.25 Because US foreign policy goals do not always align with the interests of other states, US aid policy targets three interlinked domains – free markets, democracy and stability – in order to secure its interests in

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the region.26 While there is considerable debate about American aid to Egypt,27 most of the American policy establishment adopts an underlying frame of trying to reconcile the idealism of ‘American’ values with national interests in Egypt and in the region.28 In Egypt and in the Middle East, the US faced a conundrum in trying to balance liberal ideals with geostrategic and economic interests, especially its interest in supporting Israel. Yet this aim had to overcome the obstacle of substantial societal rejection of the idea of normalised relations with Israel in the absence of a just and final settlement to the conflict. To understand why normalisation is contentious in Egypt, one must refer to Egyptian discourses. Normalisation is defined as ‘the process of building open and reciprocal relations with Israel in all fields, including the political, economic, social, cultural, educational, legal, and security fields’.29 Prominent Egyptian academic and writer Ibrahim Nawwar defines normalisation of relations as extending to include diplomatic, political and economic acceptance and integration of Israel as part and parcel of a ‘peace’ that is defined by Israel (the stronger power).30 The processes of normalisation of relations with Israel, according to other writers like Rif‘at Sayyed Ahmed, also extend conceptually to refer to a ‘penetration of the mind’ that consecrates unequal power relations as ‘normal’ or ordinary. He argues against the dominant underlying assumption that holds that the normal state of affairs between Israel and its regional milieu is a natural pre-existing peace and that resolution of the conflict would entail a return to that natural peaceful state. This process wrongly attributes the roots of the conflict to psychological factors, not to the historical and material factors of war, colonialism and occupation. The result, according to Ahmed, is that the weaker will be acting in the service of the stronger. Moreover, Ahmed implicates American aid in opening the routes that enabled Israeli access to Egypt and the rest of the Arab world.31 Opponents believe that these avenues are intended to combat prevailing Arab attitudes which reject relations with Israel as a normal and integrated state in the region, thereby discarding the resistance framework for combating the power structures and relations that embed Israel’s colonial presence and domination over Palestinians and Arab states.32 In seeking to overcome these perceptions, and also to secure its other interests in the region, the US uses foreign aid, dividing funds to Egypt into military, economic and civilian categories. The last two, especially,

INTRODUCTION

7

target wider audiences in society with the overarching goal of convincing people to follow, or at least to acquiesce to, the US models for ‘growth’, ‘reform’ and ‘peace’ – the narrative analogues of free markets, democracy and stability. These parallel narratives typify the United States’ attempts to convince its interlocutors and induce behavioural changes. Naturally, the process of convincing is best done under democratic conditions that privilege consensus over force.33 In the absence of coincident interests, the United States uses the logic of ‘market democracy’ to direct aid towards fortifying sympathetic decision makers and capitalists in any given regime, tying them to an international elite.34 According to Barry Gills and Joel Rocamora, the type of democracy that is promoted through US aid and other foreign policy instruments is designed to accommodate US-dominated globalisation and consequently yields ‘low-intensity democracy’.35 The reliance on a sympathetic partners approach was evident in the accelerated pursuit of a warm peace after the conclusion of the Madrid and Oslo Agreements between Israel and the Palestinians. According to American diplomat, ex-ambassador to Egypt (1997–2001) and exambassador to Israel (2001–5) Daniel C. Kurtzer, these two agreements had an enormous impact on Israeli –Arab relations.36 Namely, they launched open multilateral engagements between Arab states and Israel irrespective of a final resolution of the Arab– Israeli conflict. Therein and thereafter, they participated in working groups on regional security, economic development, refugees and water. Furthermore, these multilaterals brought in engagement by other parties, like the European Union, which chaired the economic development group. ‘Within a couple of years, the multilaterals were to stimulate a series of four public-private economic summits in Arab capitals, at which Israeli and Arab business leaders and officials rubbed elbows and planned joint business ventures.’37 The latter half of President Hosni Mubarak’s rule is a fitting time frame in which to assess the effects of and reactions to aid policies that promote ‘market democracy’ and the pursuit of a ‘warm peace’ in Egypt. The period from the mid-1990s to the fall of Mubarak was a time when the effects of the economic aid relationship came to fruition. Between 1991 and 1997, Egypt’s military and other debts were forgiven by the US due to its role in the ‘Coalition of the Willing’ in the first war on Iraq. Debt forgiveness and rescheduling had a significant positive impact

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on GDP growth. In 1996, Mubarak installed a new government under Prime Minister Kamal Ganzouri which passed legislation that allowed foreigners to own Egyptian property and businesses for the first time since President Gamal ‘Abdel Nasser’s nationalisations. These reforms opened the door for a structural overhaul of the US approach to foreign assistance.38 The new US aid package to Egypt phased out half of economic aid, from US$ 815 million to US$ 407.5 million over five years and divided the rest among a Commodity Import Program (CIP), cash transfers and export enhancement initiatives. The CIP finances imports from the US and gave rise to allegations of corruption by Egyptian intermediaries. Cash transfers were dispensed in response to economic reforms. Finally, export enhancement was an innovation whereby comprehensive relations (warm peace) had the most chance of implementation because it funded bilateral research and development, industrial funds for foreign investment, the creation of qualified industrial zones (QIZ) for Egypt and other peace process states and so forth. The new approach was reflected in decisions from the Doha Round of the World Trade Organization (WTO) negotiations in 2001. The Doha Round signalled a shift in approach to development whereby international aid would be increasingly redirected towards promoting trade through exports to a global market and attracting foreign investments in the export sector. (The official launching of aid for trade by the WTO did not occur until the Ministerial Conference in Hong Kong in 2005.39) Further economic transformations such as reforming markets and reducing subsidies followed. The reforms benefited a new type of business elite, who were later formally included in the cabinet of Prime Minister Ahmed Nazif in 2004. On the American side, it was within the above time frame that President Bill Clinton’s National Security Strategy of Engagement and Enlargement was launched, in February 1994. Clinton’s doctrine elaborated policy goals that linked security with the maintenance of combat-ready military forces, economic revitalisation and democracy promotion abroad: ‘We must revitalize our economy if we are to sustain our military forces, foreign initiatives and global influence, and [. . .] we must engage actively abroad if we are to open foreign markets and create jobs for our people.’40 Consequently, since at least the mid-1990s, aid has been tied to democracy promotion – efforts to

INTRODUCTION

9

spread norms, procedures and methods of pluralist governance, which include free and fair elections, universal adult suffrage, basic individual freedoms, free opposition parties and the rule of law – and to free markets.41 This strategy drove the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) and eventually evolved into the WTO, tying more countries into legal and economic arrangements that enhance and expand US-dominated economic globalisation.42 Clinton’s approach was later expanded by George W. Bush in the National Security Strategy of 2002, which featured Secretary of State Colin Powell’s USAID-led Middle East Partnership Initiative with NGOs and governments as the centrepiece of support for democracy. Simultaneously, George W. Bush encouraged trade agreements and envisioned a Middle East free trade area by 2013 as a prelude to democratisation. Congress passed the Advance Democratic Values, Address Nondemocratic Countries and the Enhance Democracy Act of 2007 (ADVANCE). The Act focused on empowering the State Department to work towards ‘transformational diplomacy’ in authoritarian states around the world. ADVANCE policy provisions committed the United States to the longterm challenge of promoting universal democracy by promoting democratic institutions, including institutions that support the rule of law (such as an independent judiciary), an independent and professional media, strong legislatures, a thriving civil society, transparent and professional independent government auditing agencies, civilian control of the military, and institutions that promote the rights of minorities and women.43 President Barack Obama inherited the above Act and continued the implementation of its policies but in a more multilateral fashion than the Bush administration had. Moreover, President Obama’s administration emphasised diplomacy and the promotion of reform on Radio Sawa and al-Hurra TV. Given the scope of the envisioned project, the strategies promoted for its execution and the divergence of interests, it is perhaps easier to see why the processes associated with aid produced dialectical dynamics in the political, economic and social discursive spheres.44

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The theoretical debate on aid in the Egyptian context US strategies for democratisation and economic reform in Egypt and the greater Middle East are tied to its interests in producing peaceful and comprehensive relations with Israel. Besides noting that economic aid to Egypt is tied to the Peace Treaty with Israel, most academic literature on the international relations of this part of the world does not ask if policy changes associated with economic aid have a specific function in producing a warm peace and, if so, by what mechanisms are these aims achieved. Different disciplinary frames usually address these issues as separate phenomena. First, globalisation and privatisation are examined as ends in themselves, underemphasising negative economic effects as well as geopolitical implications.45 Second, international relations with Israel are examined at the official political and economic levels, often overlooking non-governmental and societal discourses. Third, aid to Egypt is assessed in its domestic developmental dimension without addressing its possible role in inducing economic subordination nor its goal to change people’s worldviews.46 And finally, while there are numerous works evaluating the progress or lack thereof in the processes of economic opening and democracy promotion, few address the geostrategic and foreign policy dimensions that might be embedded in these policies. This book will use a non-compartmentalised and more comprehensive approach to evaluate the effectiveness of economic aid in achieving these tangled economic, geostrategic and intellectual goals. All three major approaches in international relations – realism/neorealism,47 liberal institutionalism48 and structuralism/neo-Gramscian critical theory49 – posit that provision of aid ought to buy the United States influence. From a neorealist perspective, this influence is a function of the material and muscular balance of power between states, which are assumed to be unitary entities that act rationally. Liberal institutionalist perspectives emphasise soft power – the ability to convince by ideas, leadership, aid and so forth – as critical to promoting hegemony in international relations.50 Alternatively, the neo-Gramscian approach views hegemony from the perspective of class, both within a state and across borders (a ‘historic bloc’).51 From the critical perspective, the ability of a class to legitimise itself – that is, achieve consensual and intellectual hegemony – entails using ideas, institutions,

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material capacities and concessions. In this model, aid incentivises elites (the ‘transnational class’), who are incorporated into dominant frameworks by their inclusion in the power centres of the State and their concomitant relations with IFIs and international non-governmental organisations (NGOs). The totality of these inter-relationships defines and sustains the world order. The critical approach allows for more nuanced examination of the transformations in Egypt under the autocratic rule of Mubarak for several reasons. First, its focus on class analyses the State as a historicised entity, the product of negotiations among social and political actors. Second, the critical model gives serious analytic weight to the capacity of international forces to produce domestic social change. Third, it emphasises that prevailing power is not just a function of material coercive capabilities but may be challenged. In this perspective, the ruling historic bloc may be altered, provided others can be persuaded of an alternative vision (‘war of movement’ or ‘war of position’). The cumulative effect of these incremental changes may succeed in overthrowing, either violently or democratically, the ruling bloc.52 Prevalent scholarship on the Middle East focuses on explaining the ‘democracy deficit’53 and on making policy recommendations in line with American interests. Prominent writers such as Tony Smith and G. John Ikenberry take seriously the reasons given by policy makers for aid.54 Others, such as Thomas Carothers, are more critical of the democracy promotion portion of aid but maintain the belief in the benevolence of US policies for the world.55 While Carothers criticises the implementation of what he deems laudable goals by US administrations, he is not optimistic about the chances of success due to cultural and historical incongruities in target states.56 In contrast, the Gramscian tradition in international relations is more consistently critical of US aid and its foreign policy.57 This tradition approaches US aid as an instrument for US hegemony, where altruism is rhetorical cover for expanding US power.58 States and societal forces are transformed through their participation in the world political economy. Ideological, legal and economic tools are used by a posited transglobal historic bloc. For example, IFIs and international organisations help elites to rewrite laws, ‘open’ economies and structurally transform relations of domestic socio-economic production and power. The newly globalised structures then become sites of incorporation and/or agency.

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Robinson argued that democracy promotion and the project of globalisation in which it is embedded reinforce each other in the construction of transnational hegemony. According to him, the transnational elite class – ‘polyarchy’ – legitimates inequalities more effectively than authoritarianism by manufacturing consent.59 There are limitations, however, to the use of the critical approach in Egypt. The Israel factor in US aid to Egypt adds a geostrategic complication that is usually not the focus of Gramscian international relations (IR). Given that the prevalent societal Egyptian discourse is not friendly to Israel,60 pluralist democracy might destabilise the USdominated status quo. Moreover, the Mubarak regime ruled coercively, relying on a narrowing base of support due to the effects of privatisation and neoliberal reforms.61 Thus, the US needed alternative methods of pluralist politics in order to attain the narrow, but crucial, consent necessary for enacting economic and institutional transformations that would align Egypt with the US strategic vision to normalise Israel in the region. Thus, the goals of aid are not derived from a domestically-authored conceptualisation of reform and progress. In Antonio Gramsci’s terms, the aim is not to foster reforms aimed at producing fundamental societal revolution that shifts the balance towards inclusion and empowerment (reformismo).62 Rather, the aims are transformist (transformismo), converging towards the centre and not challenging the prevailing (capitalist) hegemony.63 One of the possible (historical) phases of transformism is described as featuring ‘molecular’ incorporation of individual political figures into the (conservative) political class. That class is averse to mass popular political engagement that might challenge their dominance.64 Instead, governance consists of preserving the status quo by excluding social forces and by using co-opting mechanisms. In the present historical phase the bourgeois state predominates and is often legitimated in dominant bourgeois states by pluralist democratic politics. While this hegemony is consensual, it does not represent the success of reformismo (revolution and dominance of the proletariat). According to these theorists, transformism prevails. This book explores examples that indicate that transformism guided US aid policies in Egypt in order to enlist particular leaders into existing power or patronage structures (‘molecular’ inclusion, to use Gramsci’s term). This strategy redirected social movements and or emergent

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leaders into dominant apparatuses, effectively ‘decapitating’ social movements.65 In Egypt, transformism was not legitimated by democratic politics and lacked (political) checks on policies that transformed the State’s relationship with society. The transformist strategy enabled the successful (policy) outcomes that US aid did achieve in Egypt: namely, the circumvention of opposition to US strategy while obtaining consensual incorporations among power-yielding elite and institutional segments. Aid’s goals of peace, reforms and democratisation were not derived from an Egyptian national debate over these issues, but were formulated at the top. Aid’s conditionality on peace and its associated stability and security concerns meant an avoidance of reforms that might fundamentally alter the social and institutional underpinnings (reformismo) of the international and regional status quo. Instead, the economic, social and structural environment that aidprivatisation helped to create integrated the warm peace (normalisation) within the regime’s reform policies. The comprehensive peace that was stipulated in the peace treaty would furnish the means to achieve the promise of a flourishing Egypt that was propagated in market democracy rationales. The democratising and reforming narrative justified aidinspired relations with Israel and policy changes in Egypt (and other ‘moderate’ Arab countries). In Egypt, an authoritarian but ‘reforming’ regime became the next best outcome, one which would reduce the risk of instability in international arrangements, while instituting neoliberal transformations for the peace economy/globalisation. Even though US (intellectual) hegemony in Egypt was imperfect, the ability to influence Egypt was nevertheless significant. According to former American Ambassador to Egypt (1997 – 2001) and Israel (2001 – 5) Daniel C. Kurtzer Mubarak’s Egypt had become Israel’s chief ally in the Middle East, especially after the decline of the Israeli–Turkish relationship. And Mubarak and his aides had been highly instrumental in selling American diplomacy in the Arab world, in mediating between Israel and the Palestinians, and in keeping in check Hamas’ (and Hezbollah’s) influence. For years, Israelis had grown so comfortable with the relationship with official Egypt – even as they were concerned about the lack of warmth at the public level –

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that these relations were taken for granted [. . .] To be sure, the Egyptian military has continued to coordinate with Israelis as both sides have mutual interests and long-standing cooperative relations. The Egyptian military also has understood the importance of the Egyptian –Israeli treaty to Egypt and to the United States, from whom they hope to continue receiving military, economic, and political support.66 Intellectually, US aid made some progress towards producing a new dominant hegemony in Egypt. This hegemony was imperfect, however, in that there remained normative differences over Israel that predisposed aid processes to marginalise popular input while empowering cooperative power holders (transformismo). But how? Conflating reform and compliance (with globalising normalisation) produced institutional changes as well as shifted politico-economic alliances in the State. One of the most important was the movement away from Nasserism. After Nasser’s death, President Anwar al-Sadat launched a revisionist campaign that recast Nasser’s legacy.67 The revisionism was meant to justify the official policy reorientation towards free market policies (infitah) that were initiated in the early 1970s. According to the prominent Egyptian journalist Mohamed Hassanein Heikal: This is a real tragedy. Had Sadat’s eagerness to criticise AbdelNasser taken a more positive bent – to say for instance: ‘AbdelNasser has achieved such and such; it is not much, but I will build upon it’ – things might have taken a different course. The objective, however, was not criticism but eradication, and a large section of society perceived this as an assault against them. To try and erase the national memory is a very dangerous game. People were being told the opposite of what they knew as lived experience. People were being told that these were years of impoverishment. They could recall, however, that they had been years of extensive social welfare; that the great majority of the population had never enjoyed such access to housing, education, health services and nourishment. People were told that these had been years of darkness and isolation; they could recall them as the years of the theatre of the 60s, the literature of the 60s, and so on. They are told that these were years of ignorance and censorship,

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they recall them as the time in which Naguib Mahfouz wrote his greatest works, for which he was to receive the Nobel prize, and Tawfik El-Hakim published his most ruthless criticism of social and political conditions in the country. Then Egypt was producing over a hundred films a year compared to little over a dozen at present.68 Prevailing descriptions of the Egyptian economy during Gamal ‘Abd elNasser’s presidency give the impression that there was no growth. Features deemed negative for ideological reasons, for instance the large share of the State in economic production, the planned economy, the bloated bureaucracy and so forth are emphasised. This negative assessment can be seen in the works of prominent Western scholars. For example, Samuel P. Huntington and Joan Nelson noted that Nasser’s populism generated a ‘vicious circle’ where the expansion of the regime’s support base became a drain on the economy.69 Raymond Hinnebusch stated that, in the long run, Nasser’s ambitious development programme, large army, bureaucratised elite and substantial welfare state required large commitments, resulting in imbalances which were exacerbated by the cutting off of US food aid in the spring of 1965, the refusal of the World Bank to extend new loans and the disastrous effects of the Yemen Civil War (1962–7) and the June 1967 war.70 There is more to the story, however. Nasser’s era made substantive and qualitative contributions to Egyptian development and stature in the region and in the world.71 Economic growth expanded noticeably following agrarian reform and major industrialisation projects, such as the construction of the Helwan steel works, petrol refineries and oil pipelines, automobile assembly plants, fertiliser factories, mining and the Aswan Dam.72 Land redistribution policies and social welfare translated into a more egalitarian distribution of wealth and opportunity. Ordinary Egyptians gained unprecedented access to education, employment, housing and healthcare. Illiteracy and poverty were greatly alleviated and the middle class grew significantly.73 Due to the deficiency of investments by the domestic capitalist class in the new programme of national development, Nasser launched the ‘Egyptianisation’ plan. Egyptianisation entailed the nationalisation of the Suez Canal as well as of foreign-owned businesses, limitations on the percentage ownership by foreign interests in Egyptian

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enterprises and caps on the transfer of profits outside of Egypt, all major factors that contributed to the growth of the national economy.74 Overall, the centralised economy grew an average of 9 per cent per year for a decade while the share of manufacturing in GDP grew from 14 per cent in the late 1940s to 35 per cent by the time of Nasser’s death.75 Egypt under Nasser saw international achievements as well. Nasser was a leader of pan-Arab nationalism and a founder in the NonAlignment Movement (NAM – a bloc of nations independent from the North Atlantic Treaty Organization (NATO) and the Warsaw Pact, founded in 1961). Moreover, his politics were strongly supportive of anti-colonialist liberation movements and distinguished by an emphasis on solidarity with the developing world, on anti-imperialism and on anti-Zionism. These achievements partly explain the resonance of Nasser’s legacy among significant portions of the Egyptian and Arab populations. Nasserist ideas persist in the contemporary socio-political scene, especially among critical elites who remain among the intelligentsia, in state institutions, in academia and among labour. Nasserism’s contemporary relevance lies in its political project, whose fundamental principle is political and economic independence and social stability. According to ‘Amr Sabeh, a leading Egyptian political scholar on the legacy of Nasser, independent free will of the nation is the cornerstone upon which to build one Arab nation that is completely independent, features social balance between the classes and is capable of constructive and effective participation in solving world issues.76 Independence and leadership are central to Nasserism, according to Sami Sharaf, Nasser’s long-time Minister of Presidential Affairs and author of influential books on Nasser and the Revolution of 1952. Sharaf states that Nasser introduced the 1956 Constitution, which established state socialism as the basis for economic development as the Constitution of the People (al-sha‘b). At its inauguration, Nasser said: ‘We the Egyptian people seized our right to freedom and life after a continuous and common struggle against external aggressive domination and internal exploitative domination.’77 To this day, and despite the Egyptian army’s military debacles in both Yemen and the 1967 war, Nasser continues to symbolise independent Egyptian national will and to express Egypt’s Arab identity and linkage with the Arab world, progress and greater social access to state power and decision making.

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The extent to which this Nasserist worldview could be re-oriented is the yardstick by which to measure the success of the current project to transform Egyptian society into one that adopts and reproduces the dominant vision. In contrast to the Nasserist legacy and to the pre-existing sociopolitical and cultural ideals, the ruling discourse recalibrated the indicators of ‘progress’ and ‘development’ from a domestic and Arab national frame to a globalised and privatised frame (where normalisation of relations with Israel was the pass key). As such, privatisation and reforms were implemented with an eye on strategic calculations. Aid constructed symbiotic relationships around coinciding interests with a complicit, hegemonised elite.78 This allied elite leveraged their positions at the apex of state institutions to re-orient and create entities to globalise and normalise (with Israel) trade, nationalised public assets and strategic resources. Even governance and transparency norms were subordinated to geostrategic (Israel, Suez, foreign policy) and economic (market reforms, trade with Israel) gains in Egypt. Reforms that would presumably institute governance and transparency principles were implemented due to the efficient possibilities of autocratic government79 and were targeted at exploitable sectors that were of interest to dominant actors. The following chapters will show that reforms, including those targeting governance and accountability, were more intensively focused on areas of international trade, investments and contract enforcement and protection (of private property). Intervention was increasingly effective as Egypt became more economically liberalised and dependent on external linkages. Economically, the actual execution of ‘good governance’ and ‘transparency’ agendas was wanting, leading to controversies instead of conferring legitimacy on the actual practices that underlay ‘democracy’ and ‘free markets’. Unlike the model, the prioritisation of US strategic interests over Egyptian geographic and historical realities meant that US rhetorical ideological goals were perceived by critics as pretexts, undermining the ability of the US to achieve consensual and intellectual hegemony. Economic routes were especially useful to American initiatives to promote peace in aid-recipient countries like Egypt. Similarly, for the Mubarak government, this strategy was the most effective route to hit the benchmark that would keep aid flowing: increasing normalisation

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with Israel. However, external linkages with Israel compounded the costs associated with incorporation into the American orbit and were consequently destabilising – precluding ideological and moral societywide ideological hegemony. Domestically, the amenable Mubarak regime cooperated with the United States in using aid for the neoliberal transformation of the State and society. This process was reaching fruition during the latter half of his rule. It would be (theoretically) expected that greater intellectual and moral consent and incorporation would be achieved at this time of aid dispensation and accelerated reforms. Yet while alignment was largely successful, it was achieved with significant caveats, modifications and, importantly, failures to overcome discourses that challenged the negative aspects of US dominance. The chapters in this book will show that the US aid strategy that emphasised privatisation and partnerships with elites, instead of manufacturing consensual domination among the general populace, manufactured complicit and segmented incorporation, limited within the parameters of aligned interests. This argument differs from works on Egypt and the Middle East that often assume positive correlations between neoliberal reforms and ‘rule of law’ stabilisations, on the one hand, and democracy on the other (such as Lisa Anderson, Bruce Rutherford and Eva Bellin).80 Other scholarly research examines how the transparency and good governance movements are meant to counteract the potentially destabilising effects of corruption and crony capitalism on global hegemonic arrangements, but often result in locally nondemocratic and globally interventionist outcomes (for example, Susanne Soederberg and Alex Jeffrey).81 By contrast, little scholarship addresses the roles that corruption and crony capitalism might play in supporting neoliberal and geopolitical agendas.82 This book, however, will show that the reforming environment created by foreign and ruling actors utilised aid to (knowingly or unknowingly) disguise and/or employ the mal-effects of privatisation provided that it resulted in strategic compliance with US policies. For example, aid’s focus on a warm peace caused specific changes in Egypt such as the creation of QIZ instead of the signing of a Free Trade Agreement. The substitution contravened the ideological preference for free trade. This contradiction of free-market logic was necessitated by the societal intellectual resistance in Egypt to the idea of

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comprehensive and warm relations with Israel. Thus, partner, normalisation-friendly elite became the most efficient means to obtain dominant objectives. Meanwhile, these partners benefited from the redirected revenue streams. The attempt to cultivate, when possible, and to impose, when necessary, the dominant ‘common sense’ occurred in Egypt with the appointment of ‘technocrats’ (transnational elite) in the cabinet of Ahmed Nazif in 2004. Many of these ‘technocrats’ hailed from the (presumably) neutral business class. US strategy explicitly sought consenting allies. Clinton’s strategy envisioned two sets of allies. Private firms were targeted for ‘engagement’ to help open economies. In support of this goal, Congress authorised the creation of QIZ in 1996, to promote ‘peace and development’ between Israel and Arab neighbouring states by entitling goods jointly produced by Israel and either Jordan or Egypt to enter the United States duty free.83 Egypt began participating in the QIZ programme in 2005, after the appointment of the Ahmed Nazif government (of business elite) the year before. Clinton’s strategy also targeted labour unions, human rights groups and environmental advocates, all of which were envisioned as ‘natural allies’ in the US strategy for engaged ‘enlargement’.84 While private firms on the one hand and labour unions and rights activists on the other would normally be assumed to hold divergent interests and may even be considered antagonistic, the following chapters will demonstrate that the targeting and leveraging of ‘natural allies’ by the US deftly manoeuvred around the surface contradictions – at least at the official, regime-condoned levels. The US pursued both sets of allies in all earnestness: ‘antagonistic’ allies were superseded if they could not be co-opted; amenable individuals were appointed by the regime; opportunity seekers created their own organisations that would qualify to receive aid, both within and outside of government and ambivalent potential partners were hired and/or funded by outwardly neutral entities. Despite the centrality of US aid as a foreign policy tool, the academic (and policy) Western debate has surprisingly little to say about Egyptian perceptions of American aid or about the discursive evolution of debates on aid-associated policies. There is even less material on how and why aid, which is ostensibly given to foster ‘peace’, ‘stability’ and ‘development’, might be (paradoxically) destabilising.

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Much of area studies scholarship is devoted to the study of authoritarianism and democratisation.85 Thomas Carothers devotes special attention to the roles of institutions in democratisation.86 Marsha Pripstein-Posusney addresses the obstacles in civil society and institutions to democracy in the region and concludes that authoritarianism is ‘enduring’.87 Vickie Langohr highlights the different political strategies employed by activists in advocacy-type NGOs in order to oppose government oppression.88 She rightly argues that political activists choose to concentrate their efforts on NGOs, as opposed to political parties, attributing this tendency to donor incentives as well as pre-existing weaknesses of political parties. According to Eva Bellin, another major impediment to democratisation is ‘strategic rent’ in the form of military aid improves the fiscal health and longevity of autocratic governments and their security apparatuses in the Middle East.89 Specifically addressing the domestic context in Egypt, Samer Soliman’s The Autumn of Dictatorship90 argues that Mubarak’s rule was built on generous expenditures on security and on buying the loyalty of social segments (for example, capitalists). The means to dictatorship, he posits, lie in the rentier character of Egyptian revenues, so that rents from Suez, oil and foreign aid enable a big caretaker and, hence, dictatorial state. Expenditures were for coercion and control in the areas of defence and the interior (saytara), and not for convincing in the areas of culture and financing (iqna‘).91 Yet the economic infrastructure of dictatorship under Mubarak must also be placed in its international context. Foreign aid is not a passive causative variable comparable to rents from the Suez Canal or oil. Moreover, the standard litany of proposed solutions to authoritarianism, such as decentralisation, privatisation and economic reforms, are problematic. Neoliberal reforms that reduce the size of the State may enhance opportunities to asymmetrically advantage elites with economic interests, while influencing policy orientation regarding how resources are allocated. Also enhanced, is the power of the regime and its allies vis-a`-vis society who are in a position to structure public spaces using regulatory, surveillance and policing mechanisms that institutionalise neoliberal reforms, irrespective of popular desires.92 In addition, the following chapters will show that expenditures on the bureaucracy (the backbone of the regime) increased at a time when subsidies were being reduced overall. Subsidies (for

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example, for electricity) were sometimes redirected to benefit foreign and domestic capitalist business ventures in partnership with the regime. This redirection of revenue streams indicates that the regime considered foreign partners as part of its backbone of support (along with mega-capitalists and the security apparatus). Regional specialists like Lisa Anderson rightfully point to the United States’ lack of consistency in pursuing its democratic ideals in the region. However, there is an underlying assumption that American (purported/ ideological) interest in democracy coincides with US material interests.93 Moreover, the claim that the United States can achieve its goals in the area using the standard litany of tools – laws, US help (including aid) and economic reforms – is debatable.94 The literature has yet to establish a causative link between economic prosperity and democracy. In fact, in the Arab world, the countries where the revolutions broke out first were models of growing developing economies that implemented International Monetary Fund (IMF) restructuring programmes. (What is measured by economic prosperity frequently ignores Gini coefficients of inequality.)95 In contrast to Anderson, the multidisciplinary approach of Timothy Mitchell portrays a more nuanced picture of international geopolitical influences on how power is exerted in Egypt. In The Rule of Experts, Timothy Mitchell argues that modern statecraft is the product of imperialism around the globe, where power operates, not just by coercion, but also through representation and culture.96 Mitchell demonstrates how politico-economic power is fused and disguised under neoliberal autocratic conditions in Mubarak-era Egypt.97 Regional specialists also differ over the function of transnational Arab issues in domestic politics. For example, Anderson argued that ‘domains’ such as Islam and Palestine are not proper issues for citizen mobilisation and democratic demands for government responsibility. Likewise, Michael Barnett argued that transnational issues such as pan-Arabism undermine institutional sovereignty (and ‘regional order’).98 In contrast, Reem Abu el-Fadl showed that Palestine was a major factor that supported the popular protest movement demanding democracy in Egypt, building on Palestine activism and networks already in place.99 Similarly, Mustafa Bassiouni demonstrated that the most influential political movements since the turn of the century were, among others, the Palestinian Intifada Support Movement in the early 2000s, the Anti-Iraqi Invasion Movement in 2003, Kifaya and Youth for Change, all of which emerged outside of

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traditional political frameworks and connected their domestic political demands with Arab causes.100 These movements and networks represent wide-ranging contestations of (power) arrangements that were engendered by technocrats, advisors and so forth. The following chapters will show that the various policy manifestations of the aid– Israel nexus – which often combines domains like Palestine and Islam under policies of ‘fighting terrorism’ – are intertwined with governmental practices and institutions that directly impact people’s lives and, hence, inform oppositional political and accountability debates. Themes that are central to most Arabs (as evidenced in polls), such as Palestine, Arabism and Islam,101 are targets of the aid– Israel formula of ‘stability and security’. Such connections actively construct people’s realities – for example, by incorporating foreign partners and privileging those who choose to benefit from the new opportunities. This dynamic was evident in the problem of crony capitalism in Egypt that was actively engaged in building normalised and (unequal) relations with Israel, adding non-economic, national stature and security dimensions to oppositional discourse. The most resonant discursive critiques challenged the official narrative that peace, and by extension deepening and normalising relations with Israel, were necessary for Egypt’s progress along the market democracy front. These geostrategic peculiarities impact on material and ideological hegemonic production and thus provide insight into an underdeveloped aspect of the Gramscian model: how oppositions arise.

The ‘fix’ for the hegemonic problem in autocratic Egypt By the mid-1990s the reality that the US faced after many years of aid to Egypt remained one of hesitant moves towards ‘market-democracy’ as well as a still ‘cold’ peace.102 The main strategic goal that had given impetus to aid – normalising Israel – was yet to be attained. The solution, but also the problem, I argue, lay largely in structuring partnerships under the ‘reforms’ agendas. This strategy targeted and leveraged segments among the elite, state institutions and civilian organisations who stood to gain from the achievement of US policy objectives, including normalisation. Privatisation and partner elites implemented policies and structural transformations that furthered the dominant vision for a ‘warm peace’, primarily by superseding opposing

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voices. Businesses, territories, civil organisations and institutions were created or re-oriented, opening avenues for normalised relations with Israel and redirecting benefits towards elites who could exploit their positions to further cross-cutting interests with the United States and Israel. The lack of democratic checks facilitated the re-alignment of Egypt with American interests but simultaneously produced contradictory dynamics that engendered oppositions and magnified grievances, especially when normalisation of relations with Israel was a factor. The United States’ ability to achieve widely-based societal consensual hegemony was undermined: the excluded majority remained nonconsensually dominated while the repercussions of implementing a warm peace (normalisation) as part and parcel of reform processes that aligned Egypt with US policy objectives became leading themes in critical discourses. What follows will show that the privatisation of economic and civilian activities dissipated the power of public organised forces who rejected the (dominant) role envisioned for Egypt.103 In the civil society arena, privatisation encouraged dependence on foreign funding in addition to the proliferation of salaried employees. The partnership approach with NGOs in civil society had an important political repercussion: it diverted some people’s political engagement away from joining political parties and labour unions, which lacked the same access to funding, among other things.104 Thus, the strategy encouraged the dissipation and nonpoliticisation of collective efforts. Likewise, in the economic arena, the neoliberal argument that privatisation will expand ‘ownership’ in society and therefore improve economic and financial performance is actually an unwarranted assumption.105 Ownership that is concentrated in ‘strategic partners’ rendered more citizens non-owners, thereby extending the moral hazard problem onto the wider society.106 Cases in later chapters will show that aid-driven privatisation introduced foreign elements and priorities into state policies and in targeted spaces, altering the national component in the rhetorical ‘national’ project of progress or growth. Instead, privatisation substituted complicit expropriating pockets with ties to a globalised international system in place of statist-public ownership. Ideologically, privatisation and reforms de-/re-constructed relationships between the State and citizens (citizenship). Privatisation reconfigured public entities, impeding activities that might not make ‘market sense’ but which contribute to the building of social and national

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ties by responding to local aspirations. It therefore detracted from the constituent parts of nationalism by diminishing allegiance to communal social ideals.107 Economically, privatisation also limited wide-scale social sharing in the hoped-for profits and benefits. The paradoxical (dominant power) expectation that the nowfragmented economic and civil forces would extend consensual hegemony throughout society when they have become too weakened and lacking in cohesive vision due to privatisation partly explains how hegemony fails. Tactically, the strategy succeeded in normalising relations with Israel at the political and diplomatic levels but only at the cost of superseding and circumventing opposition, foregoing the potential of incorporating wider societal segments. Resistances coalesced around historical, ideological and socio-political precedents that did not adhere to the dominant framework. While much of the literature on privatisation argues either for or against its desirability from socio-economic or financial standpoints, not much is said about its instrumentalisation for strategic and political interests.108 The cases of the QIZ and the natural gas agreements presented in Chapter 3 illustrate that there was a normalisation project embedded within the economic reform project and privatisation. A matrix of structures and interventions used territorial and socioeconomic engineering to align privatised and newly-created spaces with ruling ideologies and agendas.109 Privatisation extended beyond conventional economic and enterprise-related uses of the term, affecting civil society110 and state-society relations as well as state policies towards entire regions, such as the Sinai and the QIZ areas. Thus, aid enabled privatised routes that structurally interwove US policy objectives within the economic, political, military and sociological fabric of Egypt. Territorial reconceptualisations were among its targets. This hegemonic re-mapping/re-imagining of Egypt did not coincide with prevalent societal conceptions.111 Consensual mechanisms of social control are adapted for peripheral authoritarian states like Egypt, potentially undercutting the chances for ideological and moral hegemony to prevail. Strategically, Gramscian hegemony is only a subordinate goal of the United States, disposable when democracy might challenge the dominant distribution of global power. The US strategic goal of normalising Israel affected the economic project, the type of transnational economic and political elite linkages

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that emerged and critical perceptions of dominant arrangements – that is, the scope of moral and intellectual incorporation and/or consensual hegemony that are possible. Aid structured privatised vehicles like QIZ and the natural gas agreements to use as staging posts through which companies, organisations and activities could circumvent Egyptian and Arab official and popular boycotts. As a tool, privatisation is convenient in that it hides the State, allowing alignment to occur in spaces outside the purview of the public.112 Cases like QIZ and natural gas demonstrate some pitfalls that might arise when the economic reform project proceeds regardless of progress on the political democratisation project. These territorial re-articulations of economic production benefit the transnational elite, circuitously avoiding the arduous political and discursive processes of manufacturing consent. This strategy was necessary in Egypt since it is a pivotal strategic asset to globalised dominant power relations. Consequently, developments like those described above confirmed for some regime critics that the target of aid is not always Egypt. This assessment is consistent with the peace treaty, which had a separate memorandum for Israel that pledged to: ‘endeavor to take into account and will endeavor to be responsive to military and economic assistance requirements of Israel’. In contrast, the memorandum for Egypt emphasised ‘security’ and fostering the cooperation of the Egyptian military: ‘the United States is prepared to enter into an expanded security relationship with Egypt with regard to the sales of military equipment and services and the financing of, at least a portion of those sales’.113 This type of aid was skewed towards those who would contravene popular rejection of warm peace and its attendant normalisation of relations with Israel. While such relationships allow for the coconstruction of interests with the US and Israel, they leave much leeway for fragmentation and potential corruptibility of actors, structures and institutions.114 This dynamic reduces societal consensus, making the task of the transnational elite one of sustaining mutually-beneficial arrangements with foreign elements rather than incorporating wider social strata. Normalisation became a lens that coloured evaluations of specific economic, geostrategic and political effects of aid and of globalisation. These discourses featured in the type of citizenship (muwatana) that was envisioned by critics, who built upon and updated historically-mediated Egyptian nationalism.

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It is unfortunate that for the most part the American scholarly debate about US relations with Egypt has few references to Egyptian scholars, critics and intellectuals, especially those who are critical of US policies. Awareness of critical discourses is crucial to understanding why manufacturing consent (Gramscian hegemony) is more limited in peripheral states like Egypt. Specific differences that account for limited consent include: (1) authoritarianism and the potential for corruption in transitioning institutions; (2) the fact that the ruling coalition is not as assumed – bourgeois-capitalist – but is a state-socialist bureaucratic alliance; (3) that allied partners might be perceived as stooges for foreign interests and (4) that pre-existing policies and ideological norms have historicised contexts that remain materially substantive and relevant in contemporary times.115 The critical discourses covered below pivot around socio-cultural and historical experiences and values associated with independence, Egyptian nationalism, Arabism and Palestine. These experiences and norms intermediated and/or affected the US agenda, despite aid. The following chapters will also highlight that non-economic strategic state interests played a central role in US economic aid to Egypt. Non-economic objectives, like creating a comprehensive and warm peace with Israel, managing the border in Sinai and foreign policy alignments, influenced the direction and nature of economic structural alignment that was pursued by segments within the ruling, administrative and economic elite. Their manoeuvres to circumvent internal opposition gave impetus to court challenges by unions, labour, activists, rights organisations and institutional insiders. The nature of the regime’s implementation of reforms as well as the evolving oppositional discourses problematise the assumption of imposed hegemony that underlies power-based models.116 American hegemony was not totalising, despite the length of time, the amounts expended and the economic dependencies that it created. The cases presented in this book confirm a central paradox in Gramscian theory regarding neoliberal globalisation: that it weakens labour and other dissenting social forces but that the destabilising effects simultaneously activate resistance. Economic and structural changes that were derivative of aid – QIZ, the natural gas treaty, free-markets and privatisation – were judged locally and ignited intra-institutional resistances. Aid-enabled growth of autocratic executive power developed

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its own interests, profiting from expanding neoliberal interventions and the accommodation of geostrategic treaty stipulations. The privatisation aspects of economic and civilian aid produced several leading critical debates. One entailed the rejection of support for autocracy and subordination that is engendered by military aid.117 Other debates challenged central dominant claims: that ‘free markets’ are necessary for ‘stability’ which, in turn, ensures ‘peace and prosperity’. Instead, critics demonstrated how the normalisation aspects of that effort, conducted through privatised routes, negatively impacted Egypt, both economically and politically.118 The normalisation/warm peace aspects of US aid engendered other debates, whereby critics built upon the historical rejection of Israel as well as Egypt’s struggle for independence. Egyptian intellectuals, economists, writers and activists that I interviewed, such as ‘Imad Gad, al-Naggar and Rif‘at Sayyed Ahmed, were quick to point out that US aid had enchained Egypt. Their positions reiterate perceptions of taba‘iyya, or subordination, that were voiced by older Egyptian intellectuals.119 Thus, while aid and its most effective vehicle of targeting allies sought to change the antinormalisation and oppositional potential of Egypt, material outcomes negated some of the official claims, and thus came to dominate the critical discourse.

Sources, method and chapters Because my focus is on Egyptian opposition to the execution of US aid-supported policies, especially to privatisation and to normalisation, I mainly use Egyptian sources. During the autumn of 2012, I conducted interviews with some regime insiders and critics who actively challenged regime policies. Their activism raised public awareness of major problems, corruption scandals and suspect legal, political and economic reforms. I limited the scope of my inquiry to policies that were impacted by the US aid framework. I chose these particular public figures in the opposition – ‘leftist’ intellectuals, labour and human rights activists, academics, an activist judge and reporters120 – because of the effectiveness and relevance of their activities and causes. I highlight leftist-leaning arguments and oppositions for several reasons. It is a necessary counterweight to the extensive literature casting Islamist organisations and groups as if they were the only

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opposition to the Mubarak regime that is worthy of attention. The focus on Islamists is often because the Muslim Brotherhood is the most organised ‘oppositional’ group. However, it ignores that the Muslim Brotherhood has a long history of sometimes cooperating with the regime. For example, they shared out parliamentary seats with the National Democratic Party in rigged elections.121 Another reason for the focus on Islamist opposition is because of assumptions that Islam is the ‘natural’ form of identity in an Islamic country. Moreover, a frequently cited argument is that Islamic opposition is further facilitated by the difficulty for government to ban and control forms and locales of religious expression. However, for the purposes of examining the effects of aid on US hegemony in Egypt, the focus on groups within the Islamist opposition might miss a large part of the story. Save for occasional objections to what they claim is the usurious nature of aid packages from the IMF (rescinded after the Muslim Brotherhood achieved the presidency in 2012), the Muslim Brotherhood and Salafi groups are more concerned with social/cultural issues than with economic ones. Many of their objections to certain aspects of international finance and practices are circumvented using ‘Islamic’ loopholes. In principle, they are procapitalist and pro-‘free market’. Finally, many prominent members are also large businessmen with vested interests in privatisation. Therefore, a focus on Islamists would neither yield much in terms of objections to US aid, nor reveal any awareness of how this aid functioned. Consequently, while focus on the Islamist opposition might expose broad ideological proclamations, that focus would offer little insight into how aid engendered specific oppositions to the material consequences of aid. The following chapters investigate the rationalities and effects of aid-driven privatisation as a hegemonic effort to align Egypt within a USdominated, Israel-normalising international system and the counterreactions and discourses that this process engendered. The first three chapters focus on debates that emerged from the US aid–Israel nexus in the market segment of ‘market democracy’: reforms, privatisation, natural gas and QIZ. In addition to the American/Israeli elements, these debates addressed the complex of economic and political connections across borders which subordinate the State into a permanent peripheral status122 and which, importantly, enable a warm peace (normalisation of relations with Israel) – as defined by dominant powers.

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Chapter 1 presents the macro-economic, social and structural environment that aid and privatisation helped to create in order to enhance access to Egyptian productivity, favouring particular targeted allies as well as international capital. The transformations integrated normalised relations with Israel within the regime’s globalisation policies. The US used ‘market democracy’ logic to direct aid towards fortifying sympathetic capitalists with ties to the regime and to an international elite. Aid-privatisation also cultivated aligned segments of a parallel officialdom among administrative and ruling elites and within institutions whose purview complemented US interests in the region. This strategy – necessary to normalise Israeli relations with Egypt and in the region – is transformational (not reformist/mass democratic). It therefore failed to achieve either public consensus or institutional coherence. Chapter 2 describes the institutional and economic contradictions that were engendered by the strategy of privatisation and reliance on an associated partner elite. It demonstrates that the transparency and good governance movements in Egypt may have wittingly or unwittingly served to disguise crony capitalism, and that the latter played a role in supporting a neoliberal normalising geopolitical objective. Furthermore, the privatisation and partnership strategy employed by US aid undermined the ability to achieve Gramscian hegemony in the neoliberal order even as it successfully re-oriented Egyptian state policies to benefit US partners. Aid, privatisation and normalisation furthered Egypt’s economic integration into the world economy but at the cost of segmenting state institutions, and by carving out spaces for complicit, private expropriation of previously-public state assets. Chapter 3 examines two prominent examples that demonstrate the transformative impact of the privatisation and partnership strategy in furthering the normalisation agenda. Territorial reconceptualisation and reconfiguration of economic production are part of the US neoliberal normalising agenda in its relationship with Egypt. Such transformations benefited the incorporated transnational elite and figured conspicuously in debates about QIZ and natural gas. Since Egypt is a pivotal asset to globalised dominant power relations, the US strategic goal of normalising Israel affected the economic project, the type of transnational economic and political elite linkages that were established and critical perceptions of dominant arrangements – that is, the scope of conviction and/or hegemony that are possible.

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Finally, Chapter 4 uses the lens of civil society to view and address the democracy dimension of ‘market democracy’. It examines the extent to which dominant ideas were incorporated by surveying the evolution of competing conceptualisations of citizenship and nationalism. The articulation of the new relationship between state, society and the individual as enshrined in the (reformed) constitution of 2007 is juxtaposed with other differentiated conceptualisations among various civil society outfits and critics. The public sphere, the press, civil society and geographical borders were spaces where challenges emerged, illustrating the limits of muscular and capitalist historical hegemony. In Egypt, the geostrategic dimension magnified objections to the imposed hegemony, limiting its appeal to wide swaths of society. In addition, the concentrated and redirected profits from neoliberal reforms reduced the regime’s ability to retain and expand supportive constituencies. The chapter demonstrates that US aid-related stipulations of warm peace and policy alignment played an ideological role, in addition to the economic and political roles discussed in the previous chapters. Namely, they sought to frame the articulation of citizenship and of nationalism towards a globalising and normalising orientation, which, in response, provoked competing normative visions that were historically-, domestically- and culturally-oriented and were less influenced by the US power agenda. Theoretically, the Gramscian assumption of a mostly cohesive (bourgeois) elite that competes among itself but is united in its adherence to the dominant framework was impeded in civil society – as in the market sphere – by the privatisation and partnership processes of normalising relations with Israel. The book shows that local experiences gave rise to alternative definitions of stability, security, growth, politics and national interest. Agents, discourses, institutions and patterns that were rooted in Egyptian history and geographical milieu informed debates and mobilisations that challenged the dominant narrative. In Egypt, the US-dominated globalising and normalising agenda could only circumvent, but not entirely supplant, the original identity that anti-normalisation and Arabism configured.

CHAPTER 1

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`

CREATING THE MACRO-ENVIRONMENT FOR STABILITY AND GROWTH' THAT INTEGRATES A GLOBALISING WARM PEACE'

Ya khofi ma yom el-nasr, terga‘ Sina’ w-trouh masr.1 The real target in war is the mind of the enemy commander, not the bodies of his troops.2 United States aid furthered institutional and economic policy reforms that sought to position Egypt in consonance with US interests in the region. A strategy combining partnerships and privatisation was instrumental in effecting institutional and macro-economic changes which opened spaces for the integration of a warm peace with Israel (beyond the diplomatic and political levels) within the regime’s reform and globalisation policies. The US aid framework achieved this integration by cultivating and relying on a parallel capitalist elite and a parallel officialdom within institutions in Egypt. Partnered allies served to direct the scope and nature of reforms in accordance with their vested interests and benefited from aid flows and the resultant transformations. This aid strategy came at the cost of circumventing and superseding oppositional voices. While the strategy did succeed in producing significant alignment of state policies, it was potentially unstable. Some

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Egyptian critics assessed the institutional and economic transformations inspired by the new policies as contributing to the production of a subordinate path of development. They argued that such economic subordination serves to facilitate the US geostrategic aim of a comprehensive and warm peace. While normalisation of relations with Israel (tatbi‘) per se is a highly controversial issue in the Arab world, acceptance of the dominant vision as ‘common sense’ throughout Egyptian society was further disaffected by the contradictory effects that arose in the execution of the economic and strategic agendas.

The debate on aid There is considerable debate concerning the function, role and effectiveness of foreign aid in affecting development, reforms and ideological and policy orientations. Some researchers, like Simone Dietrich,3 argue that if the quality of the recipient institutions is weak or corrupt, then ‘outcomeoriented donors’ choose to deliver aid to ‘alternative development partners’ in those states which, she claims, help development success. This argument assumes that outside donors have better insight into the quality of local ‘development partners’ and that the goals of donors and recipients coincide. The reality is that aid’s ability to effect institutional transformations is mediated by a domestic political coalition.4 In Egypt, such selectivity regarding partners produced contrary economic (but less so geostrategic) effects. US aid filtered through elite interests, which meant that they could use their positions in power and their alliance networks to promote policies that privileged themselves and their transnational partners through the construction of joint interests. Western-based assessments of economic reforms in Egypt have generally been positive. Anne Mariel Peters5 has lauded the ability of the Ahmed Nazif government to implement economic reforms. Peters’ perspective was echoed in statements made by the US foreign policy establishment.6 This outcome confirms David Bearce’s findings that foreign aid is negatively correlated with democracy, because more authoritarian systems enable the more efficient passage of economic reforms.7 Consequently, from the viewpoint of various critics presented below, these reforms, which included an acceleration of privatisation, asymmetrically benefited the interests of big business, prominent members of which were appointed to the Nazif cabinet. The passage of

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these reforms and others during the Mubarak years was not subject to popular debate. Allocations directed towards ‘democracy’ complemented economic efforts, both sets of which were filtered through elite interests. This partnered elite had access to (donor) funding to create new organisations that advocated policies and produced data and information supporting the ruling material and ideological worldview. Relying on Egyptian beneficiaries, US aid to Egypt was directed to produce piecemeal changes in multiple ministries and sectors. Smaller targeted types of interventions are seen as more efficacious than super-imposed megaplans.8 These efforts were part and parcel of an envisioned structural overhaul – towards globalisation and warm peace – of the regime’s economic policies. Nevertheless, in geopolitically important countries such as Egypt, where maintaining the stability of domestic political partners is desired, institutional and economic progress is frequently sacrificed and conditionalities are not imposed when dispensing aid.9 The fact remained that aid allocations targeting institutional and democratic reforms had an additional function to obtain the geostrategic aim of normalising relations with Israel. The mechanisms that were used to implement the aid agenda were manipulated to benefit those who directed and helped author aid policies. For example, institutional safeguards, such as the transparency agenda, that are intended to safeguard against potential pitfalls associated with transitions to free markets may, according to political economist and global development specialist, Susanne Soederberg (2001), have contrary consequences. Soederberg argues that the IMF’s transparency agenda is intended to promote economic stability (the status quo) by bolstering an ideological obligation to neoliberalism and progressing to legal obligations between states.10 Yet, contradictions are embedded within the rules of neoliberal ‘reform’.11 These contradictions arise as a direct result of who formulates and implements the aid agenda and the processes by which it is implemented. While the economic transformations that were executed under the aid framework succeeded in incorporating Egypt into the global economy, the path of development was a subordinate one that granted windfalls to power holders but disaffected the rest. As this chapter will show, economic statistics, trade relations and divestitures in the public sector manifest the costs borne by many Egyptians from the country’s geostrategic and economic incorporation into the American sphere.

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Besides noting that economic aid to Egypt is tied to the Peace Treaty with Israel, typical disciplinary frames do not inquire as to the geostrategic function of US-supported economic reforms in Egypt. The underlying fact that US aid is intended to maintain geostrategic ‘stability’, which is defined as maintaining and deepening favourable Egyptian– Israeli relations, means that there is an essential reliance on, and narrow economic integration of, elite capitalist and ruling actors to promote that stability. As such, the over-riding goal of a warm peace ensures that dictatorial and amenable interests will be rewarded while opposing views will be marginalized. Consequently, the aid framework functions to promote elite and transnational capital accumulation (and power), much of which is achieved via state and policy restructuring. The ties between the economic, geostrategic and ideological functions of aid were noted by anthropologist Suheir A. Morsy. In American Aid to Egypt: A Special Study for a General Politics, Morsy views aid as part of the changing face of imperialism, an American instrument for hegemony that opportunistically allies with Egyptians who are willing to economically ‘open’ Egypt.12 According to her, these relations were greatly expanded after the Camp David Accords, after which aid was tied with Israeli interests, economic and cultural hegemony and autocratic legislation. There have been significant developments in the US– Egypt aid relationship since Morsy published her excellent work, especially concerning the expansion of privatisation as a policy tool to help normalise relations with Israel. Moreover, dialectical oppositions have developed over the years, with more critical discourses highlighting the specific negative economic effects of economic and other policy alignment of Egypt with the United States’ globalisation and normalisation agendas. Not all scholars of Egypt are as critical of the aid relationship and its consequences. Egyptian scholar Samer Soliman saw a positive aspect in the growing dependence of the regime on the capitalist class, arguing that it may spell trouble for the dictatorship.13 Soliman attributed this emergent alliance to the regime’s failure to curtail its expenditures in response to declining revenues. Yet, his assumption that this alliance will lead to increasing pressures for democracy – oddly, through ‘private clientelism’14 – is debatable. Like Soliman, most scholars agree that the authoritarian conduct of the regime and the lack of checks on policy implementation are to blame for Egypt’s development failure. However,

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many would question his assumption that capitalist allies of the regime would sponsor democracy and establish sustainable development. Instead of serving as a vehicle for democratisation, noted scholar Timothy Mitchell showed that the new alliances fostered new avenues for gaining economic advantage, thereby granting additional resources to the authoritarian regime and its capitalist allies, while impoverishing the rest.15 Consensus among the Egyptian intelligentsia (in addition to labour and others) about the best path to development and growth is elusive. While most support the idea of democracy as a solution to resolving economic failures, many emphasise that development and growth were relatively more equitable and successful under the (non-democratic) Nasserist government. The US reliance on a dictatorial regime (Mubarak’s) to achieve its geostrategic and economic aims did not rectify the development and democracy problems in Egypt; instead, this arrangement gave rise to increasing contradictions. The authoritarianism of the Mubarak regime precluded the option of manufacturing domination consensually via pluralist democratic procedures. Meanwhile, achieving consent on normalised relations with Israel was complicated by the reality that most of the populace considered Israel a threat.16 Therefore, alternative methods were needed to align Egypt with the US strategic vision and to build consent around pro-warm peace economic, strategic and societal transformations. US aid and its conditionality of a comprehensive peace were narratively rationalised as promoting a ‘market democracy’ and posited as the key for Egypt’s developmental success. Meanwhile, the nature of the neoliberal reforms, and the actors and processes responsible for their execution, accumulated wealth in the hands of well-connected allies and those who were friendly to the idea of a warm peace. To counter the possibility that privatisation and economic reforms might risk political stability, changes in the elaboration of official economic statistics described below served to (ideologically) buttress regime policies.17 The democratising and reforming narrative that justified the US partnership strategy manufactured partial and segmented domination among an elite who leveraged their positions to author particular policies and institutional transformations that made available ‘private’ routes for alignment with US policy interests. In the case of the Egyptian Federation of Industries, amenable partners worked to institute the

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political, financial and legal mechanisms that would make Egypt hospitable to globalisation. Reforms opened up sectors of the State such as oil and natural gas for private profit, while simultaneously undermining the assumed cohesion of the State.18 However, these appropriated spaces, out of which alignment and normalisation would arise, could only supersede but not eliminate pre-existing as well as emergent oppositional viewpoints. Even though the aid donor (United States) possessed powerful leverage, the assumption of top-down imposition of hegemonic ‘common sense’ was modified in practice.19 The Mubarak regime and business elite frequently took the initiative and set the tone, pace, scope and targets of reforms. For example, the Qualified Industrial Zones (QIZ) which are discussed in detail in Chapter 3, were created partly to comply with the aid condition of normalisation. Instead of pushing for a Free Trade Agreement that would affect all businesses equally, the QIZ asymmetrically benefited regime cronies who seized upon normalisation of trade with Israel as the key to obtaining preferential export arrangements to the United States for their own businesses. Thus, the establishment of QIZ and the economic exchanges therein gave rise to allegations of undue influence by a limited number of crony capitalists and proved politically-destabilising. Normalisation added non-economic dimensions – concerning national stature and security – to oppositional discourse. The most resonant discursive critiques challenged the official narrative that market democracy requires normalisation as a prerequisite for Egypt’s progress. Egyptian economists and writers who study the effects of aid, like Gouda ‘Abd el-Khalek, argued that despite reforms, a positive services trade balance and a high growth trend, structural problems with employment and poverty remain. He further argued that Egypt’s export structure remains dependent on resource and low-tech exports. By contrast, the prior Nasserist policies had initiated massive industrialisation projects and established greater equity even if they failed to create a successful socialist economy and did not overcome entrenched centres of power.20 These discourses highlighted the subordination (taba‘iyya) of Egypt which was perceived as being a direct result of aid.21 The discourses reflected the fact that most Egyptians became opposed to American aid.22 Oppositional economists viewed some of the reforms as part of a planned disassembly of the State (mantiq tafkik al-dawla): for example,

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Ahmed al-Sayyed al-Naggar, Head of Economic Research at Al-Ahram Center for Political and Strategic Studies, described this phenomenon as ‘the existence of a private public sector in some ministries’ – such as in the military industries.23 In other ministries, the privatisation of institutional segments enabled some among the elite to advance a normalisation-friendly framework (that opened spaces for consumption). For instance, the aid-supported process of institutional twinning/ structural consonance that will be explored below affected the Ministry of Petrol and the manner of accounting for oil exports. The new accounting enhanced the rationale for increasing oil sales to Israel, which had been an early stipulation since the signing of the Camp David Peace Agreement. The Peace Treaty had incorporated Israeli President Yitzhak Navon’s requirement that oil sales in particular, and economic normalisation – a full peace – in general, would be compensation for the ‘loss’ of Sinai.24 For oppositional economists like al-Naggar, the privatisation of these strategic sectors and the new methods of accounting were the main instruments by which to ‘steal Egypt by international capitalism and large imperialist states, led by the United States’, producing economic subordination.25 Thus, the counterdiscourses of Egyptian critical economists highlighted the links with normalisation in their more general contestations of the economic rationality underlying regime policies.

Aid: Incentivising the building of a stable and peaceful ‘market democracy’ Aid is a form of lobbying, which was reciprocal and unequal, between the US and Egypt. Because the material essence of politics is who gets what, when, where and how, the injection of external resources in the form of aid created its own dynamic of international and domestic politics. Evaluations of aid were coloured by one’s position vis-a`-vis the goals articulated by aid donors. The official narrative presented American aid to Egypt as helping to secure the interests of both countries and as a partnership. A prominent theme was that aid ensures and constructs ‘peace’ with beneficial derivatives. A 2009 audit by the US Inspector General of USAID’s democracy and governance activities in Egypt explicitly states the rationality underlying aid: ‘The US Government works

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strategically with the Government of Egypt to promote peace and regional stability, counter extremism and terrorism, and create an environment conducive to economic reforms.’26 The peace and stability logic has been consistent over the years. An earlier Policy Brief to Congress provided by the Congressional Research Office in 2005 describes the basic tenets in this way: ‘US – Egyptian relations are aimed at maintaining regional stability, improving bilateral relations, continuing military cooperation, and sustaining the March 1979 Egyptian – Israeli peace treaty.’27 Over the years, the relationship expanded with general (official) agreement about the goals, if not always the pace, of reforms. Egypt also lobbied the United States over shared interests that were constructed through aid, for example, those related to military arrangements, deals, training and so forth. Because aid pays for Abrams tanks (General Dynamics) that are assembled in Cairo, and because hundreds of military officers also go for training in the US every year, among other interests, it is perhaps no surprise that most of the lobbying efforts were undertaken on behalf of the Egyptian military establishment.28 Three hundred and sixty-six contacts were reported by prominent Washington lobbyist firms for 2010 alone.29 In conjunction with the above focus of lobbying efforts as well as the destination for most of US aid to Egypt, the United States and the Egyptian government argued that the economic component of aid was intended to integrate Egypt more fully into the world economy, help achieve sustainable high economic growth, create more employment opportunities and improve standards of living. The ‘market’ component of ‘market democracy’ is complemented by the portion of aid devoted to ‘democracy’ and ‘governance’, which, up until 2009, was part of the Economic Support Fund (ESF). A leaked cable by US Ambassador to Egypt, Margaret Scobey, affirmed that: A robust economic assistance program for Egypt serves long-term US interests: it balances a relationship otherwise defined solely on security grounds, it demonstrates US interest in the welfare of average Egyptians, and it creates a bridge to assure access to future potential leaders.30 Specifically, the ESF is explicitly intended to:

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assist states critical to the Global War on Terror, particularly those on the front lines [. . .] ESF also supports programs that encourage countries to respond to the needs of their people, thereby joining the community of well-governed states that act responsibly in the international system. In the Near East, ESF supports such objectives as advancing peace and stability, building accountable and transparent institutions, creating economic and educational opportunities for youth, and countering extremist ideology.31 Despite the Leahy Amendment, which was introduced in 1997 and which prohibits the US Department of State and Department of Defense from providing military assistance to foreign military units that violate human rights with impunity, waivers were granted consistently during Mubarak’s rule. Instead, the annual State Department and Foreign Operations Appropriations Law, which funds the ESF, placed specific restrictions on Egypt. It specifies that no funds may be made available until the Secretary of State certifies that Egypt is ‘meeting its obligations under the 1979 Egypt – Israel Peace Treaty’. Note that the secretary can waive these certifications if s/he believes that ‘to do so is in the United States’ national security interest’.32 The Leahy Amendment allowed for exceptions, including testimony by the US Secretary of State that corrective steps are being undertaken and that provision of aid is warranted for extraordinary circumstances, such as national security concerns. Thus, the logic of normalising Israel drives the provision of US aid to Egypt. An associated rationale is that aid is given for the welfare of average Egyptians. Many critical economists and writers in Egypt question that altruism.33 A USAID document acknowledges that: The principal beneficiary of America’s foreign assistance programs has always been the United States. Close to 80 per cent of the USAID contracts and grants go directly to American firms. Foreign assistance programs have helped create major markets for agricultural goods, created new markets for American industrial exports and meant hundreds of thousands of jobs for Americans.’34 While military aid is clearly intended to affect the distribution of regional power under the new peace, and while the US explicitly ties

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economic aid to normalisation, few works ask how exactly economic aid might complement military aid. Few writers examine the mechanisms, besides the direct dispensation of aid monies, by which accessing ‘future potential leaders’ occurs. Moreover, few ask if the mechanisms of dispensation affect the type and scope of cooperation. Most of the economic reforms were done in conjunction with the autocratic Mubarak government or with people connected to the government. Privatised routes and private relationships in businesses, territories and structures were useful in allowing amenable elite to construct shared interests with the US. Privatised routes re-oriented state policies by superseding institutions (for example, parliament, stateowned enterprises (SOEs)) where opposition to aid-associated policies and to comprehensive relations with Israel would have been highly likely. Except for regime-appointed labour leaders, organised labour overwhelmingly opposed American aid on the grounds that it created subordination and because of the detrimental effects that its conditionalities, like privatisation, produced. President of the National Syndicate of Free Egyptian Workers ‘Ali Badri, said: ‘The Egyptian people never benefitted from aid.’ He added that ‘one hundred percent of workers oppose aid.’35 Chants against the ‘cursed aid’ (al-ma‘ouna almal‘ouna) were heard at protests of organised labour, the peasants’ union and textile workers.36

The ‘market’ in ‘market democracy’: Aid allocations, privatisation and targeted allies Economic aid is often presented as helping to fund necessary reforms for growth, as an element that ensures stability and as helping to sustain the peace, in a reinforcing loop. The globalisation wave of the 1990s and its associated free market reforms served as propitious incubators for various economic and other forms of cooperation between Egypt and Israel that would advance the main strategic goal of US aid provision: making the Peace Agreement into a comprehensive reality, otherwise known as a ‘warm’ or ‘full’ peace. Towards that end, USAID launched the Sectoral Reform Policy Program, allocating US$ 200 million per year, to support the Economic Reform and Structural Adjustment Program (ERSAP) sponsored by the IMF, World Bank (WB) and Egyptian government in 1991. ERSAP laid

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the foundation for privatisation37 via the 1991 Public Enterprise Law 203 which instituted legislative and regulatory mechanisms to launch the privatisation of 314 wholly or partially-owned SOEs and all public shares in more than 660 joint venture companies. Law 203 permitted sales to foreign entities in Egypt – which, until 2004, excluded ‘strategic’ industries and firms. USAID funded the process by which affiliated company SOEs were offered on the Cairo stock exchange for the first time. This effort was part of its Cash for Policy Reforms Program (part of USAID’s Privatisation Project), which tied the dispensation of approved aid monies to the implementation of reforms.38 By 2002, USAID had given the Government of Egypt US$ 321 million (1995– 2002) as support for privatisation.39 The Cash for Policy Reforms programme was initiated because there had been only limited success in terms of the number of privatisations and the transformations of the economy. In response, USAID and core grantee CIPE – the Center for International Private Enterprise,40 an affiliate of the US Chambers of Commerce that conceptualised the privatisation project to give ‘a more effective voice’ to Egypt’s private sector industrialists in Egypt’s development decisions – attributed the failure to the fact that the process had been driven by donors more than by Egyptians. In addition to the conditionality of reform implementation, a new strategy focused on a few ‘doable’ changes as opposed to massive IMF type restructuring under Egyptian policy leadership. The key to the transformation lay in partnering with Egyptians who could spearhead the process. Shortly thereafter, in 1994, US aid funded the US– Egypt Partnership for Economic Growth and Development headed by then-Vice President Al Gore. To help spearhead the new Egyptian policy leadership, Gore backed the appointment of a new business-friendly prime minister, Kamal Ganzouri.41 Ganzouri’s subsequent appointment in 1996 was welcomed by Robert H. Pelletreau, Assistant Secretary for Near Eastern Affairs at the State Department. He testified before the House International Relations Committee (12 June 1996) that: President Mubarak’s establishment of a new government in January reflected his personal commitment to accelerate economic reform and liberalization. It was an announcement that Egypt is open for business. Prime Minister Ganzouri already has taken steps

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to reduce tariffs, streamline the Egyptian bureaucracy, and introduce legislation to encourage domestic and foreign investment in Egypt. The Partnership for Economic Growth and Development has taken root and is already promoting private sector development. The Egyptian government recently has sold off majority shares in several para-statals through the Cairo stock exchange. The upcoming Cairo Economic Summit represents a unique opportunity for Egypt to showcase improvements in the climate for investment and to demonstrate its fitness as a regional leader in the economic arena. We are working closely with the Egyptians and others to ensure the summit’s success.42 Europe joined with its own Paris Club debt reduction of US$ 10 billion in exchange for privatisation and reforms in summer 1994 – although the real reasons were political and were intended to recompense Egypt for its role in the 1990 Gulf War.43 Pelletreau was not exaggerating when he declared that ‘Egypt is open for business’. The Ganzouri cabinet formulated an unprecedented number of laws (387 between 1996– 9), among which was a law that rendered enterprises in all sectors subject to privatisation, thereby allowing foreign ownership of previously-off-limits ‘strategic’ firms and sectors.44 Privatisation and neoliberal reforms were also heavily promoted by later prime ministers, ‘Atef ‘Ebeid (1999– 2003) and Ahmed Nazif (2004–11). According to the World Bank Database of Privatisation, the post-2004 period witnessed an acceleration in the privatisation of financial firms. The pace of privatisation in general and of financial firms in particular continued to rise throughout 2008.45 According to the Ministry of Investments 30,000 new companies were registered between 2004 and 2009; 6,000 existing companies expanded operations; and foreign direct investments (FDIs) totalled US$ 42.4 billion.46 Prior to Prime Minister Ganzouri’s successful passage of the banking law, the issue of privatising the financial sector had been highly contentious for several years. Objections focused on the potential of relinquishing the ability to steer national development independently of foreign dictat.47 Privatisation, foreign ownership laws, the IMF-imposed ERSAP and the Paris Club debt reduction worked synergistically to provide a means of avoiding potential political minefields. Instead of being debated and

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negotiated between government and citizens via the political process divisive political and social issues – such as foreign ownership of strategic economic sectors like cement, steel, oil and natural gas; the lifting of subsidies and the re-education and placement of laid off public employees – were now contained within a legalised neoliberal economic framework that was enshrined in laws and international agreements. Hence the arena from which legitimacy derived was internationalised and the struggle by those who opposed these changes was now circumscribed by and subsumed under a framework of laws, private contracts, aid conditions and separate business deals. The cash-strapped regime found it beneficial to incorporate neoliberal recommendations, rationalising its new policies as being consonant with economic changes sweeping the globe. The autocracy of the government accelerated the process, since there was no politically legitimate way of integrating citizen dissent. From very early on, critical Egyptian intellectuals dismissed the globalisation rhetoric, noting the negative effects of neoliberal transformations. Samir Amin argued that the empirical link between free markets and democracy is tenuous, that the capitalist mode does not require democracy and that any democratic rights must be conquered.48 S. Amin also stressed that capitalism separates political management from economic and social management, adding that the capitalist development recipe that is propounded as the road to equality and democracy is false since stable core income distribution presupposes inequality in the periphery.49 Another economist, Galal Amin disputed the achievements of the IMF recipe and the myth of growth to ‘catch up’.50 According to G. Amin, the myth of ‘catching up’ does not admit of the reality that, while the periphery ‘grows’, the relatively much larger core economies are also growing, albeit at slower rates. Despite the slower rates, it would take a country like Egypt more than a thousand years to ‘catch up’ with the United States, assuming that past rates can be projected forward at a constant rate (unlikely). The result is subservience, not growth.51 Nevertheless, regime rhetoric reiterated the benefits of ‘peace’, the gateway to funds from the United States, IFIs, the Gulf, Western Europe and Japan. These funds were deemed necessary to develop Egypt. Therefore, privatisation and economic reforms were rhetorically incorporated within the ‘peace, progress and stability’ agenda. Conveniently, the process and method of privatisation created

44

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autonomous spaces shielded from potential opposition by the workers and the legislature.52 Despite citizen and labour challenges to Law 203 and other legislation, the Supreme Constitutional Court upheld the government’s right to privatise the public sector. Courts thus gave the government a legal and supposedly politically neutral cover to carry out an unpopular agenda. By 30 June 2002, 190 out of 314 public enterprises (as per Law 203) had been privatised.53 Fifty-seven more were privatised by 2008.54 The cooperation of the courts related to a bargain with the regime. The Mubarak government permitted the expansion of power by the Supreme Constitutional Court, granting it some leeway to challenge the government on rights issues, so long as the courts expanded the legal private property rights frameworks that were necessary for attracting and reassuring foreign investors.55 Later, however, there was less foreign investment than anticipated and some of the negative results (including corruption scandals) were revealed in public so the government had to cut back on the pace of privatisation. Prominent economists in the opposition, such as ‘Abd el-Khaleq Farouk, detailed evidence of massive corruption in the pricing and proceeds from privatisations, maintaining that losses (corruption) were four times as high as proceeds.56 In time, the courts assumed a greater role as sites of struggle against the policies of the regime, for example regarding privatisation, normalisation and political and human rights. In challenging the regime, the courts, the Judges’ Club and the Lawyers’ Syndicate acted consistently with their long history of activism in favour of liberal political institutions and the rule of law. The agreement as well as the policies that followed relied on the rhetoric of law and order (al-amn wal-istiqrar). Even though Egypt was an autocratic regime, it had the trappings of a democratic system. Notions of law and order that are the foundation of liberal legalism were, at least rhetorically, the legitimating framework that justified the implementation of dominant neoliberal policies. To assist in the economic transformation, the US spent hundreds of millions of dollars in economic assistance. Table 1.1 shows that economic assistance was about two-thirds the size of military assistance during the 1990s and until 2003. It then gradually declined to a fifth by 2010. Egypt received a total of US$ 31.141 billion in US economic and military assistance from 1995– 2010.

1995

1996

1997

1998

1999

2000

2001

Aid to Egypt 1995 –2010, historical (US$ millions) 2002

2003

2004

2005

2006

2007

2008

2009

2010

* http://gbk.eads.usaidallnet.gov/query/do?_program¼ /eads/gbk/programReport&submit ¼ submit&output ¼ 2&unit ¼ N&program ¼ GBK419907 Note: Numbers for ESF/SSA rounded to nearest tenth of a per cent. Numbers for military assistance rounded to nearest tenth. Source: data extracted from U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, 1 July 1945–30 September 2013, U.S. Agency for International Development (USAID).

Economic support 975.8 816.8 808.1 827.2 859.9 740.7 410.1 888.8 447.9 651.5 264.8 482.0 617.4 258.4 425.5 347.4 fund/security support assistance . . . . . . 2.62 2.34 1.84 1.65 1.40 1.73 1.34 7.04 10.45 11.30 Operating expenses of USAID Department of . 7.42 2.79 3.92 0.46 1.10 0.33 4.00 2.35 2.34 . . . . . 0.20 Agriculture* total Food aid total . 7.42 2.79 3.92 0.46 1.10 0.33 4.00 2.35 2.34 . . . . . . Other economic . . . 1.68 1.45 0.25 1.61 1.73 3.79 6.02 1.40 8.70 22.26 6.00 16.51 14.99 assistance total . . . 1.68 1.45 0.09 0.29 0.03 1.63 1.46 0.82 0.90 0.60 1.29 1.23 2.22 Trade and Development Agency Military 1,342 1,373 1,305 1,303 1,351 1,334 1,300 1,301 1,304 1,318 1,295 1,302 1,303 1,291 1,301 1,302 assistance total 2,318.92 2,198.40 2,116.12 2,136.59 2,213.97 2,076.14 1,715.73 2,202.15 1,763.19 1,982.05 1,567.08 1,799.75 1,974.40 1,587.98 1,789.73 1,699.15 Economic and military assistance total

Programme or account

Table 1.1

46

US ECONOMIC AID IN EGYPT

Table 1.2 gives a more detailed view of some of the categories contained within economic assistance during the last five years of Mubarak’s rule. The structuring of civil society, democracy and governance activities under the economic component of civilian aid reflects the dual frame of ‘market democracy’ for aid. The category names suggest that the law and order component composed the legitimating framework for neoliberal policies. USAID used two instruments to administer democracy and governance activities: a bilateral agreement with the government and a direct grants programme. The dual structure (under the economic reforms umbrella) aimed to cultivate institutions and people who were willing to incorporate within or benefit from the American agenda for the region. Even though Egypt was not democratic under Mubarak in the 1990s, aid continued. Recommendations by USAID that economic and policy reforms must take place before aid was disbursed were ignored by the US Embassy in Cairo.57 Instead, the multiple processes of reforms launched by the aid-for-peace relationship were posited as helping to establish the structures and micro-relationships necessary for the anticipated market growth that would render Egypt ‘among the fastest’ growing 20 states in the world.58 Naturally, market performance needed a conducive legal environment. Therefore, both the ‘Rule of law and human rights’ and the ‘Trade policy and regulations’ categories were intended to build the legal basis for the achievement of democracy and free markets in the future. Table 1.1 also shows that funding the legal and economic foundations of economic transformation in Egypt peaked in 1995, when the United States spent US$ 976 million in economic assistance. For the most part, funding remained high, around 40 per cent of the total aid package, with only two years below US$ 400 million during the ten-year time span. Economic assistance funding tapered off to US$ 250 million by 2010. Economic aid during the early to mid-2000s was presented by the United States as part of a comprehensive vision for the region. One explicit formulation was presented at the 2003 Sharm el-Sheikh ArabAmerican Summit by President G.W. Bush. It focused on economic development, peace and fighting terrorism. Discussions held out the possible prize of Free Trade Agreements between countries in the Middle East and the United States. Jordan, Morocco and Bahrain succeeded in signing deals, whereas Egypt did not.59 The next chapter, on economic

21,500,000 11,250,000 17,250,000 41,188,000 23,694,000 23,145,000 0 (moved to military assistance) 87,504,000 48,749,000 6,500,000 0 0

29,777,000 4,250,000 15,973,000 27,873,000 16,937,000 13,937,000 1,300,000

54,408,000 71,115,000 0 0 2,823,000.00

113,649,000

195,050,000

2007

Source: data extracted from US Department of State, Foreign Assistance.gov.

Financial sector/economic development Civil society/democracy, human rights, and governance Good governance Rule of law and human rights Macroeconomic foundation for growth Private sector competitiveness Trade and investment Stabilisation operations and security sector/peace and security Education Social services Agriculture Social assistance Infrastructure

2006

2008

116,429,000 42,495,000 3,500,000 0 0

34,868,000 32,868,000 0

11,250,000 16,950,000 56,736,000

21,800,000

4,000,000

Economic assistance to Egypt by the DOS and USAID, 2006 –10 (US$)

Category and sector

Table 1.2

48,093,000 24, 433,000 0 0 0

15,000,000 7,900,000 0

6,800,000 17,800,000 16,658,000

20,400,000

5,093,000

2009

43,000,000 48,000,000 2,000,000 0 0

60,000,000 34,000,000 0

5,000,000 8,000,000 24,000,000

7,000,000

2,000,000

2010

48

US ECONOMIC AID IN EGYPT

privatisation, will show that normalisation/privileging of Israeli economic interests were perceived by various critics as playing a role in the US’s refusal to grant Egypt Free Trade status. Table 1.3 presents a more comprehensive picture of aid disbursements by sector for the period 2000–10. It confirms that funding for the financial sector was relatively high during the time when Prime Minister Ganzouri was instituting the financial sector reforms and privatisations. It reveals that the ‘strategic’ sectors of communications and energy received significant funding to help with restructuring and so forth in the years when they were being prepared for privatisation (under Prime Minister ‘Atef ‘Ebeid) and immediately after Ganzouri was appointed. The economic assistance programme also allocated significant funding to the categories of ‘Macroeconomic foundation for growth’, ‘Private sector competitiveness’, ‘Trade and investment’, ‘Civil society, democracy, human rights and governance’ and ‘Governance’. The latter two were subsets of the Economic Support Fund until 2009, after which it was assigned to the federally-funded National Endowment for Democracy (NED) in order to avoid Egyptian government scrutiny into the activities of some (unregistered) NGOs.60 Overall, USAID/Egypt’s Office of Democracy and Governance created US$ 181 million in programmes that focused on the rule of law and human rights, good governance and civil society. Democracy and Governance programmes averaged US$ 24 million between 1999 and 2009 and then almost doubled in 2004.61 Direct grants from the Office of Democracy and Governance to NGOs were awarded without prior approval from the Egyptian government. Margaret Scobey, US Ambassador to Egypt, was aware that ‘[t]he GoE believes, correctly, that the US exceeded the terms of the agreement reached in 2004 over how this [direct grants D & G] program would operate’.62 Table 1.3 illustrates that the category of Business and other services received a significant increase in funding, almost doubling in 2004. It grew steadily thereafter. Another category that obtained significant funding was the area of Trade policy and regulations. These areas were intended to open the Egyptian markets and to help rewrite the legal codes for alignment with international treaty obligations such as the World Trade Organization (WTO). The majority of these funds were dispensed between 2000 and 2005, setting the stage for privatised means to take over after that. As can also be seen in Table 1.3, disbursements rose for banking and financial services, especially after

4,676,756 64,370

5,862,027

736,844

2,388,460

90,827 15,082,250

1,436,271

1,436,271

9,173 42,864,002

1,266,543

35,214,626

1,965,907

50,000 12,406,733

3,495,661

2,422,758

1,072,903

422,553

1,266,543

59,000

106,000

307,000

85,000

727,781

2 455,587

2,442,541

2,333,694

16,123,519

105,369

1,210,739

1,210,739

FY2004

9,101,333

10,396,339

10,121,513

80,000

6,995,625

4,596,756

FY2003

5,862,027

FY2002

6,995,625

FY2001

US aid disbursement by sector, 2000 – 10 (US$)

Banking and financial services Banking and financial services Banking and financial services Banking and financial services Total: banking and financial Business and other services Business and other services Business and other services Business and other services Business and other services Business and other services Business and other services Business and other services Total: business and other Communications Communications Communications

Sector

Table 1.3

1,844,503

2,959 26,346,256

138,493 2,062 50,634,900

558,772

1,285,731

7,869,466

3,334,142

4,535,324

307,671

1,105,955

526,957 1,554,459

10,463,341

1,409,715

8,734,608

8,734,608

444,778

FY2006

10,737,850

399,172

4,683,135

4,683,135

14,465

FY2005

12,914,267

10,442,794

6,645,665

3,797,129

200,000

1,795,128

27,841,369

3,221,829

9,908,365

9,908,365

719,546

FY2007

2,556,226

22,714

1,797,479

1,363,940

880,670

311,516

17,500

1,045,958

20,164,164

3,436,936

231,868,584

83,664,183

227,100,000

117,736

1,294,443

646,139

169,091

479,213

101,252

1,307,979

3,313,022

99,211,220

14,112,420

1,434,617

122,023

6,925,285

FY2010 2,894,382

4,768,584

702,742

FY2009

1,013,523

5,031,092

51,275

7,547,478

15,416,121

4,998,343

8,461,565

8,461,565

898,861

FY2008

Communications Communications Total: communications Energy generation and supply Energy generation and supply Energy generation and supply Energy generation and supply Energy generation and supply Energy generation and supply Total: energy Government and civil society, general Government and civil society, general Government and civil society, general Government and civil society, general Government and civil society, general Government and civil society, general Government and civil society, general

Sector

Table 1.3 continued

19,066

65,928,750 800,374

9,939,692

1,126,928

901,944

47,780,804 438,126

13,293,171

3,288,075

504,789

691,816

1,439,096

679,226

8,809,081

81,422,585 577,844

27,845

1,210,724

68,178

84,454

78,345,282

2,500 479,771 12,889,004 1,686,102

FY2004

13,241,297

64,384,071 1,065,990

14,194

673,669

349,424

88,655

1,780,759

1,253,193

255,430

9,860

57,432,834

57,233,461

46,600,217

5,615 15,087,865 4,660,757

FY2003

42,864,002 6,551,379

FY2002

35,214,626 268,783

FY2001

256,344

149,591

3,870,753

102,288,924 138,409

33,322

1,030,660

12,664

4,140,470

94,803,849

52,973 114,614 50,802,487 2,267,959

FY2005

276,775

366,750

324,000

1,044,854

18,708,811

5,800,960

790,872 14,696,021

32,596,072 144,252

4,406,800

19,520,260

12,914,267 8,669,012

FY2007

79,458,006

59,964

211,360

128,616

421,694

73,458,231

26,728,824 5,178,141

382,568

FY2006

1,016,744

1,950,373

200,000

1,250,581

77,980

7,850,000 1,345,590

27,289,743

6,282,652

814,850 743,621

738,948

75,902

22,714

FY2009

34,250,719

11,606,467

1,032,927 258,804

620,000

409,239

3,688

2,934,936

378,710

FY2008

1,718,167

1,966,746

29,425

22,033,717

8,457,277

1,454,608 372,413

945,111

48,500

117,736 460,997

FY2010

Government and civil society, general Government and civil society, general Government and civil society, general Total: government and civil society Industry Industry Total: industry Other commodity assistance Other commodity assistance Other commodity assistance Other commodity assistance Other commodity assistance Total: commodity assistance Trade policy and Regulations Trade policy and regulations Trade policy and regulations Trade policy and regulations Trade policy and regulations

2,864,520

2,864,520 8,888,574

249,440,871

639,137

639,137 10,026,896

225,945,907

148,722

14,583

99,831,828

688,207 2,810,726

688,207

21,132,468

359,844,610

499,458

30,091,706

196,419,329

1,532,906

13,544,172

1,879,365 13,118,691

878,061

1,701,153

1,808,194

1,822,124

2,097,665

132,070,875 300,064,724 200,256,562

20,878,065

1,295,645

2,215,482

4,686,407

1,563,789

112,516

855,087

16,497,766

213,065

585,574

83,669,497

83,669,497

4,665 5,302,392 5,307,057

18,264,855

35,000

50,000

9,545,279

2,099,437

5,080,182

198,971,698 175,612,938 102,657,137

1,433,792

1,199,192

259,540,935

1,967,812 977,801 2,945,613 6,772,214

17,484,845

6,901,315

192,077,167 168,692,002

775,947 763,500 1,539,447 5,460,739

25,122,886

8,697,277

228,164

235,972,803

14,326,205

22,571,204

1,211,490

2,459,211

5,551,832

7,000 7,000 7,800

62,937,249

6,300

6,602,625

179,288

100,150

1,099,561

15,798,638

166,244

835,051

5,567,460

32,416,064

1,877,365

131,676,548 110,940,808

114,136

131,554,612 110,753,720

40,705 40,705 7,800

28,529,208

35,000

2,471,331

1,022,977

2,072,632

12,347,009

4,220,246

42,291,933

16,183

42,275,750

497,875

25,652,524

2,527,552

9,301,911

2,646,621

499

2,646,122

484,622 484,622

45,897,000

693,025

367,122 49,574,225

108,200

10,518,030

133,900

11,278,253

3,908,330

425644942

2,163,520

282,077,393

106,165

15,937,693

FY2004

40,789

1,931,278

FY2005

189,525,862 334,918,032 220,024,199

1,629,590

30,473,776

170,524

1

FY2003

18,593,361

284,075

45,278

FY2006

17,721,427

418,124

138,710

FY2007

41,202,147

232,847

273,360

FY2008

19,930,770

267,906

FY2009

38,329,833

349,971

FY2010

Note: Sum totals calculated by author. Source: data extracted from USAID Foreign Assistance Database (FADB), prepared by USAID Economic Analysis and Data Services on 4 January 2012.

1,034,073,554 662,298,216 818,693,264 611,112,062 395,167,049 692,444,086 465,693,505 704,532,509 309,473,608

37,528,389

44,338,462

43,039,451

113,542

505,834

FY2002

402,663

Trade policy and regulations Trade policy and regulations Trade policy and regulations Trade policy and regulations Trade policy and regulations Total: trade policy and regulations TOTAL

596,239

FY2001

1,514,826

Sector

Table 1.3 continued

CREATING

THE

MACRO-ENVIRONMENT

53

2008. The increases in funding described above overlapped with the tenure of Minister of Investments Mahmoud Mohyeddin (2004–10), who improvised new – disingenuous, from the perspective of critical Egyptian economists – forms of accounting for oil and gas sales, both of which were key to rationalising the privatisation of these ‘strategic’ sectors and to the normalised relationship with Israel. The narrative of market democracy underlay aid provision in terms of sources as well as targets. Both the National Endowment for Democracy (NED) and the State Department funded economic and civilian targets. Similarly, the Economic Support Fund was used to fund the two categories of Government and Civil society. The linkages provide redundancy in the methods that were intended to achieve the same goals. WikiLeaks cable releases revealed that the Egyptian government had objected to the funding of (unregistered) civil society organisations as a form of foreign interference. In response, US policy makers switched from direct funding of these groups in order to ‘reduce confrontation’ with the regime. US ambassador to Egypt, Margaret Scobey, recommended in a cable marked ‘secret’ to the State Department on 30 April 2009 that using the Economic Support Fund instead of the Government and Civil Society Fund would elicit less opposition from the Egyptian government.63 In addition, there were instances of transitive funding via organisations in other parts of the Middle East (Morocco) that appeared as Arab but were, in fact, funded by the United States.64 The above-described approaches to aid were necessary. Historically, in the absence of a common vision with the Egyptian people, advancing American interests had been difficult.65 The persistence of a cold peace meant that a new approach to aid needed to be used. Hence, from the mid-1990s, US aid shifted from infrastructural development to state institution building, using a strategy of forming partnerships with ministries for aid-conditioned reforms.66 Trade and, especially, privatisation (divestiture of SOEs, encouraging international investments, etc.) gained the lion’s share of funds. Only 25 per cent of the total economic aid package went towards infrastructure; while 63 per cent went towards trade and private investment.67 Expenditure on infrastructure ceased entirely in 2007. (See Tables 1.2 and 1.3.) The tables in this chapter detail the financial aid allocations for economic and civilian targets that were instrumental in effecting the narrative (‘free markets’ and ‘democracy’) and other goals driving

54

US ECONOMIC AID IN EGYPT

American aid to Egypt.68 The data shows that the bulk of economic aid was directed at finance, trade, banking and business sectors. In addition, Table 1.4 shows that US aid was offered to Egypt within a wider, interlinked global (US-dominated) network of other international donors. Moreover, it reveals the relatively high share of aid that reverts back to non-Egyptian, and specifically American, enterprises as well as NGOs.

Alignment from within: Building institutions and disseminating dominant ‘knowledge’ Within Egypt, the provision of aid had created its own dependencies, incentivising the creation of structures and behaviours that depend on and seek aid. For instance, the Mubarak regime established the Ministry of International Cooperation in October 2003 to procure aid and work in close cooperation with international donors in the implementation of (foreignauthored/influenced) reforms. Some people in the intellectual opposition who perceived aid as an addiction described the job of the new ministry as ‘begging’ (Wizarat al-Shahata al-Dawliyya). For example, ‘Imad Gad and Ahmed al-Sayyed al-Naggar at the Ahram Center for Political and Strategic Studies both characterised aid as creating a ‘begging’ dependency.69 Gad, who was also a member of the Foreign Policy Committee in parliament, commented that, under normal circumstances, aid is only given for exceptional and temporary reasons. But that is not the case with Egypt, which even set up a special ministry for ‘begging’.70 Similarly, as will be argued below and in Chapter 4, a network of quasigovernmental, but technically civil society organisations – like the Egyptian Center for Economic Studies (ECES) and Gamal Mubarak’s The Future Generation Foundation, a ‘governmental’ NGO (GONGO) – derived their budgets from foreign aid and had an exclusively (connected) elite business class membership, keen on privatisation and globalised trade. Along divergent lines, other civil organisations like Awlad al-Ard Association for Human Rights (Awlad Al-Ard, see Chapter 4) broke this dependency on foreign aid citing pressures to adhere to a foreign agenda as a reason.71 US aid’s market agenda was further served by an institutional restructuring when the Investment Authority (previously administered under the Ministry of Finance) was set up as its own independent Ministry

CREATING

THE

MACRO-ENVIRONMENT

55

of Investments by Prime Minister Nazif. Mahmoud Mohyeddin was its first minister until the revolution, after which he was appointed Director at the World Bank. Under Mohyeddin’s leadership, the Ministry of Investments liberalised the business climate. One effect was a rise in Foreign Direct Investments (FDI), which increased from US$ 2 billion in 2004 to US$ 13.2 billion in 2008 (and US$ 9.1 billion in 2009).72 Significantly, institutions such as those described above that had been created, restructured and co-opted, developed programmes that privilege beneficiaries of the reforming and globalising system. They also reproduce and/or (at worst) pay lip service to proposed dominant economic benchmarks for reforming developing nations – for example, governance and transparency. In the case of the Ministry of Investments, alignment meant that it was the first Egyptian government agency to implement USAID’s and the IMF’s ‘governance principles’. USAID gave technical support to the Investment and Free Zones Authority, advising on financing and discounting incentives so as to encourage investments.73 Structurally, the Investment Authority proclaimed ‘barnamaj altaw’ama al-mu’assasiyya’ (literally, the programme of institutional twinning) beneficial. Various types of cooperation with USAID focused on replicating and/or establishing institutions and arrangements that were ‘structurally in consonance’ with macroeconomic IMF and WB policies, as well as with US efforts to effect economic policy reforms through aid. Structural consonance was an explicit aim of the United States and was one of the benchmarks against which USAID programmes were measured.74 Structural consonance had little to do with issues of concern to widerreaching disaffected social sectors, like social security, increased employment and so forth. In fact, the views of those who objected to US policies were dismissed. For example, a Program Evaluation report to USAID detailing the impact of USAID programmes on Egyptian policy reform programmes (ideologically) judged and dismissed local objections: ‘Most of this work can be dismissed as illustrative of local preferences for statist economic policies seeking to counter the building evidence that state-led growth policies have been a failure and cannot lead to sustainable long term economic growth.’75 In an effort to disseminate concepts that would extend institutional twinning further, organisations were created to serve as intersections between economic institutions and civilian networks and outfits. One institution that emerged out of the cooperation between the Investment

56

US ECONOMIC AID IN EGYPT

Authority and USAID, was the Bedaya (Beginning) Center. Bedaya is putatively independent in terms of budget, cadres and officers. It brought together businesspeople, investors, civil society and the leaders of institutions who were active in vectors of the State that were intended for investments and privatisation.76 The Bedaya Center educates and assists entrepreneurs of small and medium-sized businesses (SMEs). It also helps partner these local businesses with international corporations and markets.77 Bedaya illustrates the importance of producing legitimating ‘knowledge’ alongside the institutional changes described above. For instance, the above-cited statistics about foreign direct investments (FDIs) are pieces of dominant-disseminated information, displayed as achievements on the home page of the Ministry of Investments website. Yet there are other types of information that are not as flattering to the market success story. Specifically, part of the growth of FDIs was attributable to two developments. One, the large increase was mainly a result of an accounting improvisation by Mohyeddin. Instead of spreading long-term investments in the oil and gas fields over the expected age of the project (the standard business practice), Mohyeddin upfronted accounting for all investments when the deal was signed.78 In the meantime, the new impressive totals seemingly justified the privatisation of the previously-off-limits strategic sectors of oil and gas. Privatisation granted capitalist access to controlling Egypt’s resource development from within. A second development was that under intense IMF pressure, the Egyptian pound was completely floated on 28 January 2003 by Ministerial Council decree after it had been tied to the dollar in 1991. The weaker pound made the public sector much cheaper to buy during the privatisation wave. Meanwhile, the loans in foreign currencies on the books of SOEs now had to be paid back much more expensively, making their financial profiles look even weaker. Consequently, their valuations fell and they became more profitable for private investors. Thus, according to al-Naggar, floating the currency made privatisation occur ‘under pressure’.79 This type of data is not captured or disseminated in information that is published on the Ministry’s website (nor on the websites of IFIs). Thus, in terms of knowledge production, the total numbers for FDIs affirmed the ideological superiority of the free market and made everyone look good, the Government of Egypt (GoE) as well as the advisors (IFIs, the US, Europe).

21,398,376

529,328,224

394,533,433

13,107,108

12,295,547

113,542

1,518,850

56,606,022

15,621,223

523,233,977

216,600,506

11,962,521

1,514,826 2,347,165

505,834

3,288,075

63,717,975

2001

800,374

2000

666,291

Church and faith based – United States Enterprises – non United States Enterprises – United States Government – non United States Government – United States Multilateral – other Multilateral – United Nations Multilateral – World Bank Group NGO – international NGO – non United States NGO – United States Universities and research institutes – non United States

2003

12,625,362

2,141,632

2004

7,181,801

1,978,055

2005

8,358,119

1,166,120

2006

23,244,734

1,407,360

2007

20,750,383

3,415,150

2008

15,522,173

743,621

56,967,348

2,167,245

170,524

5,289,893

10,756,808

40,015,287

1,723,210

8,734,815

8,030,098

29,858,399 50,000

4,791,668

2,320,984

17,480,284

143,186,545 368,423,360 210,502,988

47,897,690 35,000

1,562,506

7,869,375

9,559,952

6,433,636

56,403,295 35,000

8,592,617 5,048,807

1,468,472

57,804,842

288,953,365

73,950,915 6,300

12,602,866 10,678,872

2,285,810

55,153,462

62,586,283

2009

58,804,090

25,123,647

586,413

48,034,814 133,900

13,646,108 4,340,174

125,000

200,000 2,973,326

27,980,695

15,469,023 108,200

9,973,922 2,736,081

10,330,717

44,984,088

449,480,334 113,450,880

428,388,424 375,314,686 335,442,649 310,675,058 242,787,196 220,214,302 131,371,917

12,641,108

2,265,182

2002

Economic assistance by implementing partner, 2000 –9 (US$)

Implementing partner

Table 1.4

Universities and research institutes – United States Total

2001

4,372,078

2002 3,786,345

2003 1,685,148

2004 1,505,234

2005 1,600,770

2006 6,698,397

2007 8,135,921

2008 16,531,055

2009 28,280,592

Note: Prepared by USAID Economic Analysis and Data Services on 4 January 2012. Source: data extracted from USAID Foreign Assistance Database (FADB).

843,039,451 1,034,073,554 665,619,423 818,693,598 611,112,062 395,158,226 692,444,086 469,780,264 711,083,117 309,847,653

2000

3,581,059

Implementing partner

Table 1.4 continued

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The dominant production of knowledge can be observed by comparing the parallel, but discrepant, issuance of macro-statistics from different institutions in Egypt. The regime generated two types of economic information. One set of statistics came from the Central Agency for Public Mobilisation and Statistics (CAPMAS) (Al-Jihaz al-Markazi li al-Ta‘bi’a al-‘Amma wa al-Ihsa’) which was closest to Egyptian public institutions. The other set, which was useful for the official dominant narrative, came from statements by the executive and from state institutions that were more closely connected with IFI’s (for example, the Central Bank) and with newly established think-tanks and organisations. This duality is important because, internationally, the Central Bank is the main purveyor of information about the economic performance of the State. Its statistics are usually reproduced by global financial institutions. It is also the first recipient of USAID funds. The Central Bank’s statistics are decidedly rosy in comparison with those collected by the agency closest to state institutions, CAPMAS.80 Yet IFIs republish and disseminate Central Bank statistics, adding credibility to official claims while simultaneously polishing the image of neoliberal reforms and the supposed benefits of structural adjustment, privatisation and other projects promoted by US aid. Thus specific, chosen (sometimes enhanced) results are normalised as optimal for recipients of aid in developing countries like Egypt. The new ‘data’ is hegemonically useful disinformation.

Benefits of the free market and privatisation? Critics and competing discourses Al-Naggar was the first economist to explode the manipulation of official statistics so that it became a trend among researchers. His many books, articles in newspapers and interviews on satellite stations have had a great impact on the debate over issues arising from the implementation of neoliberal reforms in Egypt. Even economist Hazem el-Beblawi, who served as Deputy Prime Minister and Minister of Finance during the Ganzouri government (post-revolution), noted that discrepancies and ‘useful’ types of information – that is, convenient for rationalising policy re-orientation – existed. Nevertheless, el-Beblawi criticised those among the public who held scathing views of the IMF – which

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had acquired the popular nickname of ‘International Gloom Fund’ (Sunduq en-Nakad ed-Dawli, a pun on its name in Arabic, Sunduq elNaqd el-Dawli). El-Beblawi defended the IMF’s evolving role, arguing that it was gaining experience with time as it functionally branched out its operations into the developing world, which had previously been the domain of the World Bank.81 The production of macro-data, other than about FDIs, from Egypt was affected by IMF/dominant recommendations. Take the oil and gas sector example cited above. In 2006, at the insistence of the IMF, Egypt switched its method of accounting for oil and gas exports from GNP to GDP.82 The previous method of accounting had only included national production by Egyptian firms. Now, however, Egyptian ‘exports’ included the sales of products sold by foreign interests that operate on Egyptian territory. Reporting by GDP boosted the value and quantity of exports and provided narrative proof of exceptional growth in exports. Thus, for the year after the switch in accounting occurred (2006), exports of oil and hydrocarbons amounted to US$ 5.018 billion per CAPMAS, but were considerably higher (47 per cent) at US$ 7.413 billion per the IMF/Central Bank.83 Along similar lines, all exports between 2004 and 2008 to the US, Canada and Mexico were more than US$ 26 billion per the Central Bank versus around US$ 5 billion per CAPMAS. Similarly, total exports were US$ 16.5 billion lower in the CAPMAS reports than in Central Bank reports.84 The new method demonstrated the value of ‘opening’ this previously off-limits strategic nationalised sector to foreign investments. Notably, Israeli investors, as was the case in the EMG deal (see Chapter 3), now had access to strategic sectors. Privatisation offered an additional discreet advantage. As ‘domestic’ producers, the oil and gas sectors could take advantage of state subsidies for inputs, including electricity for production. The size of the subsidy just to the oil and gas sector was almost as large as the budget deficit. Covering the subsidies required injections of cash from the Ministry of Finance. Consequently, subsidising that sector increased internal debt. The problem was compounded by the fact that Egyptian imports of oil and gas products were increasing faster than its exports due to its growing economy and population. However, while this reality was disguised externally in GDP data, it was blatant internally. The government paid for the products of foreign firms sold domestically at

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the international prices that the firms were obtaining via their global sales, even though the State paid to subsidise fuel for Egyptians (and for firms operating in Egypt).85 In other words, not only was Egypt subsidising international investors, it was also inflating their profits by not requiring them to sell domestically at cost. In short, the foreign and domestic elite privatised (neoliberal) recipe produced favourable statistics on the books of private firms and for reports to IFIs. However, it created internal fiscal disorder, with intra-institutional and budgetary indebtedness, that are extremely difficult to untangle. Assisting the ministries in knowledge production were a number of domestic, foreign-linked organisations. One example is the Center for Policy Evaluation and Macroeconomic Analysis (PEMA), which assesses projects that are financed by foreign assistance (through the Ministry of International Cooperation). PEMA also supports the coordination of development aid with ‘Development Partners’. It thus ‘helps in revealing the extent to which projects, which are funded by our development partners, are successful in attaining their objectives and contributes to highlighting what sectors need more investment and where are the challenges to overcome’.86 Another example, at the centre of the process of privatisation in Egypt, is the Egyptian Center for Economic Studies (ECES). Established with a US$ 10 million endowment from USAID in 1992, ECES was an (incorporated) research institution that connected local researchers, business and industry leaders and policy makers – including Gamal Mubarak – with their international counterparts. (After the fall of Mubarak, several ECES members faced corruption charges in court.)87 Its policy papers, studies and conferences are meant to assist the Ministry of Finance and other entities that handle privatisation and reforms. One such conference, the 1999 ‘Growth beyond Stabilization: Prospects for Egypt’, invited international personalities such as Jeffrey Sachs (IMF) and Muhammed al-Erian (ex-co-CEO of global investment management firm PIMCO) as part of a Distinguished Lecture series.88A survey of the summaries of the policy papers produced by ECES indicates a strong emphasis on free market reforms that go beyond sector-specific and microinstitutional fixes. This type of research paralleled the explicitly stated prime focus of US and IFI aid. Their (trickle-down) economic assumptions dismiss investments in human resources and infrastructure as ineffective until and unless broad economic policy deregulation is instituted.89

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As in the oil and gas examples above, the production of dominant knowledge discourses was integral to justifying the structures and relationships out of which normalisation could occur. A similar process of knowledge production by a segment of allied elite (cum officialdom) occurred with the Federation of Egyptian Industries (FEI). FEI was assisted by the aforementioned Center for International Public Enterprise (CIPE) in the dissemination of data about Egypt. CIPE is one of the core grantee recipients of US federal funds for global work related to promoting democracy and free markets. CIPE assisted FEI in becoming an economic information centre that is the premier source of industrial economic information in Egypt.90 As a result, FEI established a library, published reports while its members wrote articles for the newspapers and appeared in the media. Moreover, both CIPE and FEI published monthly analyses of economic indicators for dissemination to the public and to member companies. An oppositional economic discourse developed among Egyptian intellectuals and economists like Galal Amin, ‘Abdel Khalek Farouk and Ahmed al-Sayyed al-Naggar. There was also opposition within state and/ or public institutions. For example, former ambassador Ibrahim Yusri filed a lawsuit contesting the EMG natural gas deal. Likewise, Ibrahim Kamel, the engineer at the Egyptian General Petroleum Corporation who was assigned by the board to assess the deal’s benefits, also opposed the natural gas deal. There was more opposition within unions and professional syndicates – for instance, from president of the National Syndicate of Free Egyptian Workers, ‘Ali Badri – and from political parties in the opposition, like Tajammu‘ and the Egyptian Socialist Democratic Party. Issues raised by economists in the Egyptian opposition show perspectives that diverge significantly from US aid institutions in terms of priorities and framing. Oppositional viewpoints asserted that the impact of US aid on the average Egyptian is marginal. They added that aid does not address Egyptian needs and that the United States benefits much more than Egypt. A big portion of aid goes towards paying the salaries and expenses of USAID – which are far greater than local salaries. Moreover, ‘in kind’ aid is offered at inflated prices above what could be obtained if purchasing from the global marketplace. They were critical of the way that aid encourages food and other dependencies and the way it is dispensed from an ideological position

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that ignores responsibility for the detrimental effects of neoliberal reforms like increases in poverty, unemployment and inequality. Critics argued that aid also constructed highly unbalanced trade relations, so that Egypt became one of the few countries in the world with which the United States enjoys a trade surplus. Focusing on the ‘peace’ aspect of aid, critics expounded that aid supported a new breed of businessmen that started forming in the 1970s, who have international business links, whose allegiance is questionable and who cite the peace narrative in a manner that harmonises with the West. They emphasised that aid is linked to Israel by various mechanisms that are ‘humiliating’ and ‘provoke’ the public.91 Writers in the 16 January 2012 edition of Al-Ahram al-Iqtisadi, a prominent mainstream source for economic coverage, sum up the main goal of aid as one of maintaining the Egyptian state as hostage to the choices made by the ruling elite, so that it submits to creditor countries and financial institutions.92 While it was important that the dominant discourse adopted by the Mubarak regime and the United States be legitimated by becoming common sense for the average citizen, substantiation in real-life experiences for those outside of incorporated spaces was hard to come by. Even internally, American agencies and auditors could not establish causality between US aid and Egyptian economic performance.93 A USAID impact study by Sullivan concluded that little economic reform had taken place as a result of USAID.94 Later in 1999, an evaluation prepared for USAID concluded that it is impossible to directly trace causation between aid and economic growth and that the three main approaches to quantifying effects – proportions, correlation and multiplier models – were all inaccurate for Egypt.95 The difficulty in establishing causation did not impede the US embassy in Cairo from taking credit for the ‘dramatic improvements’ in the Egyptian economy.96 Similarly, five years later, in 2002, and after the appointment of the neoliberal ‘Atef ‘Ebeid government, quantitative domestic evidence was selectively evaluated (cherry-picked) by USAID auditors. Occasionally, when numbers did not fit the narrative of superior performance by private entities in the now freer Egyptian economy, they were dismissed by USAID auditors as false. For instance, a quarterly review of privatisation in Egypt by the CARANA

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corporation working with the Privatisation Coordination Support Unit (PCSU) of USAID disputed statistics which showed that of all the Egyptian SOE, only 56 were not profitable, while the vast majority, 260 were profitable.97 CARANA described them as ‘so called profits’ and SOEs as ‘so called profit-making entities’ with overstaffed, low-productivity workers and low return on capital investments. CARANA attributed the supposed fake profits to ‘soft budgets’ and government financing of their deficits. Even though CARANA was unable to measure any direct positive impact from privatisation on Egypt’s economic performance, it still ideologically propounded its benefits, citing ‘certain positive factors and tangible results that can be closely linked to privatization’.98 One impact cited in the report is that the Egyptian government’s fiscal resources were expected to rise because privatisation cuts the ‘future losses’ of public enterprises.99 Not only was this claim based on an unsubstantiated forecast, it shifted the goalpost as to what privatisation was supposed to achieve: away from increased investments that enhance the productive capacity and profitability of the enterprise and towards improvement of the Egyptian government’s fiscal liquidity (and incidentally, its ability to pay back international debt). Dominant claims such as the above were objectionable to critical Egyptian economists like El-Naggar and ‘Abd el-Khalek Farouk. They argued that the proceeds from this type of privatisation merely alleviated temporary fiscal budget deficits, while adding little to the physical productive assets of the country. On the normative as well as economic levels, these economists contended that since the Egyptian state had spent enormous sums restructuring these firms, and since it was Egyptians who managed the reorganisations to prepare SOEs for sale by making them attractive to investors, then it is citizens who ought to be the prime beneficiaries. Their broader dispute had to do with the role of privatisation: they argued that it ought to be viewed as a diversion of capital away from new investments into original projects in an economy.100 Other economists more closely allied with IFIs and the regime, such as Hazem el-Beblawi, disagreed, arguing that the distinction between debt for investments and debt for budgetary and trade balances is ‘economic folklore’. El-Beblawi contended that liquidity is equally as important as investments in running a country.101

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Socio-political effects of privatisation and the partnership strategies Practically and strategically, from a dominant (foreign and domestic) perspective, finding the causative link between privatization and economic growth was not the issue – alignment with US policies was. In addition to the potential profits from currency exchange, there were commissions from simply moving cash around, in the deal per se. The official (dominant) narrative also experienced a relative strengthening because privatisation disaggregated the opposition. It undermined statist and labour economic bases of traditional socialist/nationalist forces and splintered nationally-focused economic-political debates into objections to particular deals and scandals. The preferences of the regime and of US aid converged in this process of disaggregating elites and institutions. Conditionalities attached to the Cash Transfer Program (1991) required specific reforms in public policies in return for aid and required that monies be spent on American products. Privatising SOEs was a cornerstone of this policy. In addition, how the money is spent is a joint decision between the Ministry of Foreign Affairs and USAID, even though technically, the money is in an Egyptian government ‘private’ account. The agreed-upon reforms redirect public funding away from potentially productive public enterprises, thus helping to undercut the viability of organised public sector groups. These groups constituted the traditional social base that prioritised national independence, selfsufficiency and long-term national industrial and human capital development (versus quick profits). In response, there was a marked increase in labour protests against privatisation.102 Likewise, political parties such as the Egyptian Socialist Democratic Party became opposed to aid, not just for its conditionality of privatisation but also for its tie to Israel and maintaining the peace treaty. Another specific example where US aid countered institutional resistance to reforms was via the Economic Support Fund. An attached conditionality allowed USAID to interfere with appointments at specific ministries. For example, former employees at the Ministry of Finance complained that technical assistance project funding would only be released when particular USAID-favoured Egyptian partner employees were appointed by the Egyptian government. This pattern was repeated in other ministries. In another example, USAID refused to release

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monies earmarked in previous years for the Ministry of Planning and International Cooperation until after Ahmed Nazif was instated as the new Minister of Finance in 2004.103 Such conditionalities create built-in incentives for ministerial employees to prioritise obtaining and retaining USAID’s favourable opinion, and thereby cultivate a built-in cadre of aid policy supporters. Other avenues of segmenting and penetrating elites and institutions included granting access to resources like travel, trade privileges, education and so forth or via expert advisors, or joint committees or projects.104 In addition, the official narrative precluded certain conclusions relating to the capacity for autonomous reform. Admitting that state institutions and cadres can execute reforms that fix maladministration would eliminate the supposed need for privatisation. The narrative of the regime and of aid providers similarly minimised the role of government in any transformation – it would be ideologically extraneous. For instance, the free-market and institutional changes introduced by the Privatization Coordination Support Unit (PCSU), which was responsible for implementing USAID’s three-year (1999– 2002) Monitoring and Coordination Services Project, did not so much reduce the government’s role in the economy as redirect it. PCSU, like many other USAID-funded outfits as well as International Financial Institutions, work with, at the behest of and for government(s). Not only is PCSU federally funded through USAID, in Egypt, it mostly worked with nine public ministries to re-orient state policies and establishments towards privatisation.105 Specifically, PCSU worked with the ministries of Public Enterprise, Foreign Trade, Electricity and Energy, Telecommunications and Information Technology, Transportation, Civil Aviation, Housing, Utilities and Urban Communities, Industry and Technology Development, Supply and Internal Trade, Petroleum and International Cooperation. In the meantime, the government’s commitment to reforms and privatisation required a circumvention of voices that refused to adopt the dominant vision. The PCSU working for USAID recommended that the Egyptian executive and the legislature have a ‘consensus’ about a policy of privatisation in order to enhance its chances of success. This recommendation assumed that there is democratic representation in the legislature. It hid the fact that any such consensus excludes everyone not represented in an autocratic regime, namely, most people.

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Secondly, PCSU claimed that bureaucrats added ‘procedures and layers’ (that is, checks) that ‘increase transaction time and costs’ that jeopardised the ‘viability’ of the targeted institutions and tended to drive away potential entrepreneurs.106 Therefore, for reasons of ‘transparency’, PCSU recommended that the bureaucracies in charge of public institutions be circumscribed in their ability to supervise and to have input that might impede privatisation. The combined outcome of the two recommendations was that USAID assigned the Egyptian government the role of redirecting public social wealth towards private owners, while removing potential impediments. (The country’s general index of national inequality (GINI) coefficient reflected one widely experienced effect from the above recommendations. There will be more on this in Chapter 2.) Thus, the implementation of dominant recommendations depended on the circumvention of potentially-resistant voices and the cooperation of willing individuals among the administrative, executive, legislative and business elite. Thus also, the injection of external resources (aid) by privatisation led to law and disorder (when lucky) or, in some cases, to outright corruption (when unlucky).107 In fact, in an interview with al-Naggar, Dr Ratna Sahay, the official in charge of the Egyptian file at the IMF and vice-president of Middle East and Central Asia Division, admitted partial responsibility for the corruption that resulted from privatisation – in addition to admitting the shortcomings of various imposed conditionalities, like the flat (20 per cent) tax and the imposition of reforms such as lifting subsidies without democratic and popular consensus.108

Malfunctions in the execution of the economic reform agenda: decentralisation, private boxes and divestment Another aid-linked process had similar effects in terms of preferentially empowering (and sometimes corrupting) specific social and (intra)institutional segments. Decentralisation is parallel to and connected with the privatisation agenda for transforming Egypt. The idea behind it is to empower local people and institutions vis-a`-vis the government by redistributing functions and resources. In Egypt, some aspects of decentralisation allowed for the creation of power centres that lie beyond the purview of the public eye and of state supervision – in other words,

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forces that might resist change. From 1989 to 2009, USAID spent US$ 800 million in decentralisation projects.109 Importantly, some of the decentralisation reforms included the creation of ‘private boxes’ (al-sanadiq al-khassah) within state apparatuses and in the provinces.110 Private boxes were beyond public oversight and were off-budget entities, funded by foreign donors, special taxes and the imposition of user fees for services within state institutions, ministries and bureaus that had previously been provided by the government. Private boxes were not supervised by the Ministry of Finance nor were they part of the national budget. According to Hazem el-Beblawi, private boxes proliferated haphazardly and were used to construct patron–client relationships for corruption, trips and ‘perks’. He further asserted that private boxes segmented national funding and dissipated national priorities for budgetary expenditures.111 Not surprisingly, some of the administrative elite availed themselves of the new (decentralised) possibilities, strengthening the hands of regime insiders who were willing to partake in neoliberal reforms. In other words, instead of reducing the regime’s power, decentralisation’s use of private boxes indirectly enhanced the regime insiders’ and clients’ autonomy and economic clout. It also segmented elite and state institutions. The potential for corruption may have been an unintended consequence of decentralisation but it should not have been unexpected.112 Politically, private boxes built an aligned officialdom, whereby the elite could: (1) create extra-statal income dependencies among lower-level workers; (2) use the alternatively-funded structures as bargaining chips with centralised power and (3) speak on behalf of the vast number of employees within state institutions while retaining and redirecting income streams to pay for inflated executive salaries, sweetheart deals and so forth. Thus, while extra-statal off-budgetary funding was promoted by the United States to help institutions become self-sustaining, in effect it created a parallel (private) officialdom. In terms of achieving (ideological and moral) hegemony, instead of building consensual domination these methods built segmented partnerships. Privatisation enabled some groups of officials to build economic ties outside of Egypt. Law 13 (2004) was meant to simplify the process of investment. It allowed for the issuance of temporary licences so that projects could proceed immediately, that is, before final approval by the authorities who had jurisdiction and expertise. One affected area was the establishment of an agency for privatising (state/public) land. Once

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again, a reform had a contradictory effect: the agency in charge of issuing the temporary licences allowed some in the regime as well as foreign capitalist investors to elude institutional and public oversight. Subsequently, public property was ‘bought’ for a fraction of its true cost. Investors often received generous public incentives, financial coinvestments, infrastructural assistance and subsidies for inputs like electricity. Famous examples include land development in the Sinai and in the Toshka development.113 This new more ‘efficient’ method of temporary licensing for privatisation was facilitated by assistance from the International Financing Corporation (IFC), a part of the World Bank.114 Importantly, USAID recommended a specific type of privatisation: namely, sale to a ‘strategic investor’.115 This form of privatisation also helped construct segmented and complicit domination (of parallel officialdom). Among the different methods of privatising enterprises, the United States lauded privatisation via sale to strategic investors as more profitable in its post facto assessments. Forty-nine per cent of all Law 203 companies was sold to strategic investors.116 People familiar with and opposed to these sales pointed out the self-fulfilling mechanism that was structured into the strategic investor deals. First, the State invested vast sums to restructure enterprises that were to be privatised in order to make them more appealing to investors. Thus, the driver of profitability was primarily public, not private. And second, the Egyptian government marketed its most profitable and best companies to international/strategic investors who, in turn, were only interested in profitable firms.117 Moreover, the strategic investor method produced an effect that contradicted dominant claims that privatisation would increase public ownership, thereby granting more people a greater stake in the State. Instead, sale to a strategic investor did achieve elite aims. Among those are marginal and absolute enhancement of benefits to regime insiders, partners and foreign capitalists who, through their connections and insider knowledge, were often advantaged in bids and negotiations.118 Effectively, many of the sales of SOEs amounted to domestic and international exchanges of financial paper and assets – a result decidedly different from the creation of new productive assets.119 Also, sale to a strategic investor facilitated the redirection of the privatised enterprise because it minimised the need to deal with multiple and disparate points of view that would normally exist in a public firm.

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Importantly, the strategic investor method served geostrategic motives as well. The case of al-Marajil below demonstrates the discursive gap between the dominant discourse of governance stressing oversight, transparency and law and order, on the one hand, and the popular and intellectual discourses rooted in daily experiences and in cultural and historical milieus, on the other. These gaps were especially prominent in privatisation deals with normalisation dimensions. In this case, the inability to alter negative popular attitudes towards Israel practically compelled reliance on private, benefiting segments. Al-Nasr Boilers and Pressure Vessels Manufacturing (al-Marajil al-Bukhariyya) was sold to a strategic investor. According to el-Naggar, the United States pushed strongly for its very early privatisation.120 The deal resonated negatively with regime insiders as well as the leftist opposition, labour and even some mainstream economists.121 Al-Marajil was a world-class enterprise and the only one in Egypt that was capable of being used for the production of centrifuges for nuclear enrichment and technological development. In preparing it for privatisation, the firm was saddled with a huge amount of debt, rendering it (conveniently) non-profitable. Al-Marajil was sold in 1994 to an anchor/strategic investor, the American–Canadian firm of BabcockWilcox, for US$ 16 million, a fraction of its true worth. Bechtel Corporation handled the valuation.122 Al-Marajil was categorised by financial experts and regime affiliates as an unviable enterprise. Once declared unviable, assets are released to the private sector, as per Law 203 (1991). According to critics of the sale, this categorisation was used against enterprises that have the potential to alter the uneven balance of power favouring Israel. As a result, al-Marajil was disassembled and sold off in bits and pieces for a fraction of the price of the land that it occupied – without counting the business revenues.123 The irony is that the land on which the factory was located was donated by the original inhabitants to the State at the time of former President Gamal ‘Abd elNasser as their contribution to national development.124 Some perceived this sale as a pointed US (muscular) hegemonic intervention intended to remove a potential strategic threat to Israel.125 Consistent with Gramscian theory, privatisation redistributed wealth and increased income gaps. Consistently also, it introduced foreign elements – American, Israeli and international – into Egyptian production. Importantly, the inclusion of the normalisation imperative

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provoked political and normative dissent, adding another layer of objections to the economic grievances that typically arise as a result of neoliberal transformations in Egypt as in other parts of the world. In the case of al-Marajil and other cases to be explored in later chapters, negative effects associated with normalisation became causes ce´le`bres at the popular level and central to the oppositional discourse of critics of the regime. Additionally, the reconfigurations outlined above were the handiwork of massive governmental (US and Egyptian) efforts. They affirm the theoretically-expected ‘orthodox paradox’ which refers to the reality that, despite a rhetoric of free market logic, a large governmental role is essential in the implementation of liberal political and economic reforms with respect to privatisation.126 Like many other transitioning states implementing market reforms,127 the Egyptian government resorted to illiberal means in order to overcome local resistance. However, that illiberality was not driven only by vested interests within the State. An additional exogenous variable, namely donor aid, may have been implicated in the production of illiberal outcomes. As seen in the alMarajil case above, proof of fraudulence did not void the contract of sale for the former SOE. Furthermore, as will be seen in Chapter 3, the pronormalisation pressure created by aid and privatisation facilitated the path for the regime to avoid submitting treaties that might provoke opposition, like QIZ and the export of Natural Gas, for parliamentary approval as per the constitution. Finally, the FEI reform example below also demonstrates how donor assistance was complicit in producing a less representative outcome than had already existed. The reform of FEI resulted in less representation of Egyptian rank and file industries as well as industry leaders (who are opposed to reforms). Meanwhile, foreign companies that invest in Egypt became included as represented members. That reorganisation assisted in the passage of a donor-framed policy agenda by partner elite with regime connections.

The democracy component of market democracy: transformations in civil society Privatisation was used as a method beyond the economic sector by USAID, Europe and the World Bank in the democratisation segments of their respective aid packages. The vast majority of monies set aside

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for democracy was in the form of grants given to (private) NGOs – ‘civil society’ – that qualified after submitting proposals for project funding.128 While the dominant liberal ideal of civil society compartmentalises that sphere, designating it as distinct from business, the State and the private sphere (family, religion), the reality is more complicated.129 In Egypt, as in other parts of the world, the boundaries of civil society are fuzzy, with connections between the private and the public spheres. Anthropologist Soheir Morsy points out that families play a large role in capital accumulation around the world.130 Similarly, there are connections between religion and civil society in religious clinics, satellite stations, Islamic banks and the dominance of religious organisations over professional associations and so forth.131 Moreover, it is seldom acknowledged that civil organisations are often composed of outfits whose leaders are neither elected nor representative. Thus, they are less accountable to society (if at all) and could therefore be more flexible in dealing with foreign governments and the executives of international NGOs.132 Many of the qualifying organisations were, in fact, variations on civil society. Among those are GONGOs (governmental non-governmental organisations), NGOs created and/or run by government officials and appointees, frequently designed to replace or displace legitimate NGOs. Examples include Women of Islam and the National Council on Human Rights, both of which were established by the Mubarak government. Some elite who were connected with the regime formed non-profit GONGO, whereby, because of education, connections and resources, they could out-compete other civil society organisations in their ability to obtain foreign funding. Both Susan and Gamal Mubarak had their own GONGOs. In addition to GONGOs, there were PINGOs – public interest NGOs; DONGOs – donor organised NGOs; and BINGOs – business interest NGOs. The latter include globalised corporations. Different types have varying interests, approaches and organisational structures, which complicates the simple designation of civil society organisations.133 Some organisations emerged mainly due to donor demand. These were mostly umbrella organisations acting as intermediaries to dispense large blocks of foreign funding to small domestic NGOs.134 Like GONGOs, these organisations intersect with international elite.135 Importantly, the successful submission of proposals, and hence the

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likelihood that they obtain funding, were a function of the ability to speak and write in good English and/or a European language. Activist Ghada Shahbandar136 delivered a lecture at a conference sponsored by the European Union (EU) about the need for donors to hire Arabic translators. She pointed out that people who really need the aid often do not have the language skills to fill out an application. According to Shahbandar, no one was interested. She attributed this apathy to funders’ primary interest in fostering pockets of elite counterparts who sometimes hide the government behind the NGO. Such funding in developing nations does not produce changes that would positively affect those most in need.137 In fact, by the American Regional Inspector General’s own admission, the democracy and governance activities achieved limited results. In fact, there was less democracy, fewer rights and less freedom in 2009: ‘Egypt’s ranking remained unchanged or declined for the past 2 years, and the impact of USAID/Egypt’s democracy and governance programs was unnoticeable in indexes describing the country’s democratic environment.’138 The US audit blamed the regression on lack of cooperation from the Egyptian government. Nevertheless, the United States was undeterred by the lack of progress and cooperation. Both the World Bank and UNCTAD (United Nations Conference on Trade and Development) showered accolades on the unique progress of economic reforms in Egypt.139 Aid from the United States continued because its underlying purposes were being fulfilled: the political goal behind US aid, normalisation of Israel, continued. Besides the fact that normalisation proceeded apace (as confirmed by the annual testimony by the US Secretary of State before Congress), the interwoven pattern of aid provision, targeting amenable organisations and individuals in the market and civil society spheres tamed and channelled political, economic and civic engagement in the public sphere. One prominent illustration of the above process is the Federation of Egyptian Industries (FEI), touted by CIPE and USAID as a success. It illustrates how the US donor dispensed aid so as to methodically cultivate a segment of aligned partners whose interests could be advanced by the US vision for privatisation and reforms. FEI is the oldest business federation in the Middle East. It was established in 1924 by Talʽat Harb, an economist and the founder of

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Banque Misr, the first Egyptian national bank with Egyptian shareholders whose mandate was to finance Egyptian development. FEI worked with CIPE, an affiliate of the US Chambers of Commerce, and with USAID over a period of several years. CIPE and some up-andcoming members within FEI sought to change the organisation from within so as to enable it to lobby the regime for specific economic policy reforms. CIPE’s efforts promoted exclusivity. In fact, CIPE promoted a very specific type of ‘privatisation’ in the FEI – which effectively manipulated a quasi-governmental business institution. In the process, some of the criteria for transparent privatisation, such as democratic elections of the board of directors, election of a chairman and so forth were not implemented. CIPE/USAID justified these omissions as being due to the unique structure of FEI. Instead, key members were appointed based on ‘thematic and geographic’ and ‘technical’ expertise, which consolidated divisions and segmented an organisation with a previously national vision. Moreover, this quasi- privatisation of FEI altered the criterion for funding: instead of the original exclusive reliance on funding from the Egyptian government, FEI now received funds for its projects and activities from foreign governments (USA, the EU, Germany and Denmark). Moreover, FEI could now only accept funding from Egyptian government if it was unconditional and did not interfere with self-governance.140 CIPE declared that the emergent (sympathetic) leadership was revolutionary. The most prominent of these ‘revolutionary’ leaders who were listed in the CIPE report – Ahmed ‘Ezz, Mamdouh Mekki, Mohamed Farid Khamis, Samir ‘Allam and Galal El Zorba – were all accused of serious corruption charges after the fall of the regime. These individuals worked closely together alongside USAID to end mandatory membership in FEI. They moved the old guard aside by successfully changing the retirement age. They also pushed for the privatisation of all Egyptian Chambers of Commerce (ECC), the largest representative organisation of the business community, numbering three million members.141 In so doing, they undermined the possibility of wide societal (and even wide business) input into the reform program. These initiatives were assessed positively by USAID: ‘The FEI is now one of the most effective lobbies for positive private-sector reforms and thus is a strong supporter of the US strategic plan for Egypt.’142 Partly as a result of their efforts:

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laws have recently been enacted that permit the privatization of the Big Four GoE-owned commercial banks, that control over 80 percent of Egypt’s demand deposits, the GoE-dominated insurance firms, and the GoE monopolies of maritime port services. The leadership of FEI with CIPE support was a key factor in eliminating the monopolies of port services. Legal reforms now permit pension funds of the GoE employees to be invested in the private sector, rather than in just GoE-owned enterprises. In addition, the industries that were formerly considered strategic and off-limits to privatization only four years ago, in sectors such as maritime ports, power, telecommunications, airports, roads, railroads, portable water and other public utilities and services, are now being privatized or developed through the private sector. Many of these industries are closely affiliated with FEI member industries’.143 Due in part to efforts such as the above by CIPE and the emergent young business leaders in FEI, the push towards privatisation of Egyptian economic sectors and industries now came from within an Egyptian institution and supported Prime Minister Atef ‘Ebeid’s newly introduced legislation. Thus, ‘Ebeid, who had been the previous minister responsible for the public sector, now became directly responsible for ‘successful privatisation’. Significantly, the new leadership of FEI used their positions in the much larger organisation of the Egyptian Chambers of Commerce to pass a law that for the first time made it legal for non-Egyptians to be members.144 Thus, FEI started representing Americans and Egyptian – Americans. According to CIPE: The FEI provides an effective lobby for business and economic reforms that enhance the performance and profitability of US companies that are rising in number in Egypt. All US industrial companies in Egypt, since they are legally registered firms, are members of FEI. Many new US industrial companies are expected to be opening up operations in Egypt over the next few years and would be members of FEI. Also, FEI is opening up membership to affiliate companies, including banks and insurance companies, in an effort to raise its revenues and thus FEI sustainability, as described more fully

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below. Many of these new affiliates would be fully or partly USowned such as the US insurance giant ALICO, which has already applied for membership. The FEI, which has a close relationship and considers itself a partner to the US, after a difficult start has made and continues to make great institutional improvements over the past 18 months that in turn are yielding powerful economic, social and political benefits. The US support through CIPE has facilitated a process by which FEI leadership is transforming the organization institutionally into [sic] is one of the most powerful agents for economic and business reform in Egypt.145 CIPE and USAID directly advised on and wrote some of the policy agenda that Egyptian businessmen advocated using in their connections with the regime.146 The final effect was that FEI was transformed from a public representative institution of Egyptian industries into a donor designed NGO in all but name, with the help of USAID and CIPE. The new leadership of allied business partners was ‘dominated by a private sector mentality’.147 They leveraged their connections with the regime and their positions within FEI to promote a project of business-friendly and privatisation reforms. CIPE boasted that it helped create a ‘private sector type representative quasi-governmental group [. . .] in a former socialist country’, a remarkable achievement.148 FEI’s new role as a partner of the US and as a lobby for business and economic reforms that enhanced the bottom line of US companies in Egypt resulted in powerful economic, social and political transformations – benefits according to CIPE’s characterisation in the quote above. Allowing foreign representation and the privatisation of FEI and the Chambers were contentious issues. Objectors criticised the restriction of societal input, especially from people opposed to privatisation. They also protested the granting of a voice to foreigners in the formulation of policy reforms, privatisations and the industrial affairs of the government.149 The allied partner driven transformation and quasi privatisation of FEI succeeded even though CIPE admitted that they were proposing this ‘action agenda’ without ‘experience in transforming public associations into private ones in former socialist countries’.150 CIPE acknowledged that it lacked an ‘expatriate manager with substantive knowledge of business associations and inadequate CIPE understanding of Egypt’.151

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Neither deficiency presented a consequential obstacle to the ideological conviction about the rightness of CIPE’s/the US’s agenda for Egypt. CIPE made a few adjustments. It addressed initial conflict arising from enormous wage differentials in the QUANGO (quasi-governmental NGO) between Egyptians and Americans who were working in close proximity. Moreover, Egyptians resented CIPE’s refusal to relinquish managing all the funds because, technically, FEI remained a governmental organisation. These flaws were corrected by not having them work too closely together and, more importantly, through the provision of subgrants to business associations. The sub-grant (targeted allies) strategy was replicated in wider civil society. One such entity that was similarly supported, but by the National Endowment for Democracy, was Gamal Mubarak’s business QUANGO, the Future Generation Foundation. Moreover, the lessons were subsequently applied in USAID funding procedures at the Ministry of Economy and at the Private Enterprise Office of the Ministry of Public Enterprises, which handles privatisation.152 In short, CIPE and USAID indirectly funded GoE policy reforms via business partisans of privatisation in the still-‘nationalised’ FEI. These young ‘leaders’ formed their own QUANGOs and received funding. The role of CIPE and USAID then became one of oversight, ensuring that FEI managed the monies in accordance with USAID policies. Thus, in the case of FEI, segmentation and transformational strategies of privatisation and of decentralisation occurred in representative institutions, with complicit partners therein. The process preferentially and indirectly strengthened the hands of amenable individuals in some civil society organisations, in representative associations like FEI and in ministries. External resources injected into the political system enabled those who might choose to avail themselves of the new (neoliberal) opportunities. This process cultivated change from within. The privatising transformational method was tied through the logic of market democracy to democratisation. CIPE received funding from the National Endowment for Democracy (as well as USAID) to ‘promote democratisation’ ‘by providing technical and financial assistance to Egyptian private business associations and think tanks’. Looking over annual reports from NED and USAID, CIPE was consistently the top recipient of aid.153 As predicted by Gramscian analyses of IR, restricting membership in FEI and the Chamber of

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Commerce was, counter-intuitively, ‘good’ for a democratisation that channelled political and economic engagement in line with the donor’s vision. Donor parameters and framing privileged those whose interests were aligned with the funding partners, allowing them to supersede and circumvent resisters. The usefulness of cultivating allied quasi-official partners within FEI was amplified further because many of these clients were networked/ connected with other centres of business and political power. An example is the relationship between the US Embassy in Cairo, the American Chamber of Commerce (ACC) in Cairo and Egyptian and Egyptian– American elite with access to the executive branch. One key individual in Egypt’s transformation is Taher S. Helmy, an Egyptian – American lawyer who was the first Chairman of the Board of the ACC in 2003 (re-elected in 2005). While the ACC was established without obtaining a permit, its extra-legal existence did not deter Prime Minister Nazif from making its offices in Dokki his very first destination in an official capacity after being appointed.154 The networks of allied partners is evident in Helmy’s biography: he was a board member of FEI, a founding member and partner at Baker & McKenzie in Cairo and in Riyadh (Helmy, Hamza & Partners), the principal founder and former chairman of the ECES and a founder of the International Economic Forum and the Future Generation Foundation (with Gamal Mubarak). He also served three terms as a member of the US– Egypt Presidents’ Council and was a member of the ruling National Democratic Party’s Supreme Policies Council. In that capacity, he helped draft and write key economic legislation.155 With Gamal Mubarak and other captains of industry at ECES and FEI, Helmy was pivotal in the development of legal, financial and economic transformations that furthered private sector reforms. At the same time, Helmy’s firm (a partner of Baker & McKenzie) handled more than US$ 3 billion in privatisation deals. Moreover, Helmy helped write the law that slashed corporate business taxes to 20 per cent, granting windfall profits to industry leaders like Ahmed ‘Ezz, the steel king, who were ECES fellow members.156 The Helmy example shows the efficacy of using privatisation in order to cultivate partners who can be networked for the purposes of executing and advancing American ESF aid goals, namely, making Egypt available for globalisation within the American orbit.

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Given the relative success of the partnership strategy (from within and without), it is no wonder that the annual lists of recipients of US aid – available from the National Endowment for Democracy, the State Department and WikiLeaks – show that aid was increasingly directed towards cultivating specific partners among the institutional and business elite.157 This strategy was pursued not just by USAID but also by other US-based organisations, such as the Ford Foundation and the Soros Fund. Aid that was not given in the form of sub-grants (which grew with time) was carefully delivered, first by deposit at the Central Bank of Egypt and subsequently to outfits approved by the Mubarak regime. In other words, this method of transforming the macro-economy had a built-in mechanism that empowered clients of the regime who had interests that aligned with the United States.

Conclusion As this chapter has described, targeted partnerships and privatisation were effective tools in transforming the economic, structural and informational environments in Egypt from which the United States could successfully promote its policy agenda. Meanwhile, government insiders and connected business leaders benefitted from exploiting their positions as power holders, converting political (and public) capital into economic wealth. Henceforth, change could be spearheaded from within by aligned segments. Alignment, then, had the potential to become self-sustaining. This chapter has shown how the aid process constructed an economic, informational and institutional environment that enabled elite partners to work more effectively alongside the dominant (US and regime) agenda. These segments had access to external resources and to domestic levers of power, which they used to initiate, sustain and advance transformations to the economy and to institutions, opening them up for consumption. The new leaders, however, were not in a position to convince and elicit consent among the populace. The limited number of partners meant segmentation within institutions and among the leadership, which translated into the circumvention and/or supersession of alternative local and possibly resistant voices – for example, among economists, labour, public employees and even within the business class.

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Moreover, the aligned elite and officials could have had difficulty becoming the Gramscian (ideational leadership) elite because their main task was not to build consensus but to sustain mutually beneficial arrangements and advance cross-cutting interests with outside actors. Building popular consent met other obstacles. The actual execution of these projects catalysed the emergence of oppositional themes and efforts. Later chapters will demonstrate why the economic reasons for criticising US-supported policies in Egypt became compounded by normalisation linkages, consequently affecting perceptions of US aid, reforms, leadership, national progress and direction and so on. In business, the economy and civil society, the United States’ aid strategy exhibited a preference for segmented and limited transformation (transformismo) that was ultimately divisive. This preference arose in order to circumvent widespread societal national discourses that, unlike the rhetoric and conduct of ruling power holders, were often opposed to the dominant (US and regime) course and had different motivating historical, commonly-held and/or counter-hegemonic ideas about what their present and future ought to be. These transformations were destabilising. Outside of incorporated circles, experiences and popular conceptualisations of what was just, common sense and preferable, were confronted with the material effects of the dominant promotion of peace by market democracy. Opponents of these policies perceived these changes as: legalistic rather than just; autocratic when necessary to ensure order; and subordinating through normalisation and through economic and political assimilation into the American orbit. While the external injection of resources into these private nodes enabled them to supersede resistant institutional structures and established discourses, aid dispensed in privatised spaces only displaced, without entirely eliminating, pre-existing discourses. Thus, destabilising forces formed simultaneously with the operation of hegemonic arrangements with the regime.

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PRIVATISATION AND PEACE' BY PARTNER ALLIES: ALIGNMENT AND OPPOSITIONAL CRITIQUES

From the website of USAID, we learn that it partnered with Egyptian counterparts to support Egypt’s transformation to a more market-oriented economy, making Egypt a regional leader in economic reform. Past reforms lowered tax rates while increasing tax revenue, cut barriers to trade and opened industries to competition. During Egypt’s transition to democracy, USAID has continued to support the goal of promoting a globally competitive, educated and innovative human resourcesbased economy that benefits all Egyptians equitably. This can be achieved through job creation, economic recovery and reform, private sector business growth and strengthening the environment for trade and investment.1 USAID relied on partnered elite to create a macro-environment that was conducive to globalization that integrates a warm peace. This chapter will highlight problems that arose in the execution of dominant policies, including the governance and transparency movements, by juxtaposing official US and regime discourses against those of policy critics. Implementation gave rise to internal contradictions, revealing that reform

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initiatives were sometimes economically counterproductive for Egypt. Reforms sometimes disguised – intentionally or unintentionally – sweetheart deals that support a globalising, warm peace agenda. The privatisation drive that was powered by economic aid complemented military aid, both serving as tools to help attain warm peace objectives. Below, the business example of the privatisation of al-Nasr Boilers (al-Marajil al-Bukhariyya) demonstrates that aid-driven privatisation created an environment that denationalised economic and developmental priorities, producing an outcome that was favourable to the US interest in preserving Israel’s strategic edge. Aid allowed the US to act as intermediary, buffer and enforcer in the pursuit of its geopolitical goal to create a warm peace between Israel and Egypt and, through Egypt, the rest of the region. Relying on the symbiotic cooperation of the Egyptian regime, aid and privatisation rendered warmer, non-diplomatic relations with Israel less transparent and ideationally less provocative. This trilateral arrangement, which was created to manage the potential shift in regional power in aftermath of the 1973 War,2 meant that the Egyptian– Israeli relationship in its various military, economic, scientific and even cultural dimensions usually entailed American funding, coordination and partnership. Similarly, areas of symbiosis and/or cooperation with Israelis or with the US that might have provoked public rejection were either hidden behind private businesses or within the aid-dependence framework of US partner-mandated reforms and stipulations. The results, from oppositional economic viewpoints, were subordination, dependence and the institutional structuring of normalisation.

The debate Egypt and its societal forces were transformed through their participation in the world political economy. These transformations exposed conflicting tendencies and ideas within the State itself, for example between and within economic classes and institutions. While the dominant approach, echoed by liberal institutionalists and neorealists, assumes that international norms and institutions are the solution, the evidence below illustrates some of the pitfalls arising from such an assumption. This assumption raises questions regarding the wisdom of relying on an autocratic regime or on its connected administrative and business ‘partner’ allies for reforming and instituting

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international norms such as transparency and governance. Moreover, targeted institutions exist within their respective material, sociopolitical and historical contexts, all of which dynamically interact with, transforming and/or impeding, the proposed hegemonic ‘solution’. The examples below from Egypt demonstrate the Gramscian International Relations thesis that democracy promotion and the project of globalisation in which it is embedded serve to construct and reinforce transnational structural domination – of the bourgeois neoliberal system.3 Ideological incorporation was more problematic. The authoritarianism of the Mubarak regime limited the potential by which pluralist procedural politics could manufacture consent. Egypt’s transnational elite class was not necessarily ideologically or politically equipped to incorporate sufficient social bases so as to sustain stable environments.4 Moreover, the fact that the structural domination that occurred had a geopolitical strategic dimension of warm peace with a former enemy further detracted from ability of the partner elite to convince policy opponents. Thus, US aid’s strategy of reliance on a ‘polyarchy’/partnered elite (involved in contentious reforms and privatisations) was delegitimating, undermining the ability to achieve societal consensual domination in the neoliberal order. There is a tendency among some scholars working on the Middle East and Egypt to assume that neoliberal reforms correlate with ‘rule of law’ stabilisations and transitions to democracy.5 Such reforms often include implementation of transparency and good governance, which serve a dominating global function. According to scholars Soederberg6 and Jeffrey,7 the transparency and good governance movements serve as a means to attain the ‘rule of law’ so as to counteract the potentially destabilising effects of corruption and crony capitalism on global hegemonic arrangements. Corruption and crony capitalism, however, may play a role in supporting neoliberal and geopolitical agendas.8 This chapter explores specific outcomes that resulted from aidinspired reforms that supported a dominant neoliberal and geopolitical agenda of privatisation and peace – within the framework of ‘good governance’, ‘transparency’ or market sense (for Egypt) – but which were judged by critics to be unsustainable, unviable, contradictory or suspect. Endogenous elite responses to the opportunities afforded in ‘free market’ reforms had consequences for the achievement of

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geostrategic (stability) goals. Critics like Egyptian economist Galal Amin argued that the State had resigned its core responsibilities after the Camp David and Infitah policies removed Egypt as a regional power and subordinated its economics and foreign policies to US agendas.9 Instead of a national development project, the declining role of the State opened up spaces whereby wealth and power could advance personalistic interests under the umbrella of privatisation.10 Legal, governance and transparency norms were subordinated, adjusted and/ or discarded subject to dominant geopolitical preferences in Egypt and to the economic and political concerns of allied partners. Primary among those preferences is the American interest in achieving a warm peace between Egypt and Israel, economic goals for trade and free markets and military and foreign policy cooperation with US objectives in the region.11 Aid and privatisation carved out territorial and institutional spaces wherein private expropriation of resources previously under public control normalised relations with Israel while further integrating (and subordinating, according to critics) Egypt’s economy in the drive towards ‘globalisation’. Even though these effects pertain to other supposedly democratizing regimes in the region that also receive aid, Egypt was pivotally different.12 Aid’s integral tie to a warm peace necessitated that Egypt, the Arab state with the largest strategic weight and the third largest economy (by GDP), function as a stepping stone by which Israel could economically access the rest of the region. What the dominant strategy treated as structuring a democratising and reforming state whose institutions would institute and adhere to governance and transparency principles was in reality due to the efficient possibilities of autocratic government.13 Claimed accomplishments such as the ones by USAID above were perceived differently: as counter-productive, subjugating and/or outright harmful. Regime critics noted that some of these efforts created an environment removed from institutional oversight and excluded voices that opposed peace or American-recommended reforms. As will be illustrated below and in the following chapters, more than any other factor of policy alignment with the US, the Israel-normalisation component required supersession of public resistance. It thus came to dominate resistant discourses of critics of the regime and contributed to the rise of opposition.

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National progress? Competing discourses of economic peace versus economic nationalism The Israeli conceptualisation of peace, based on comprehensive ‘normal’ relations, was adopted by the United States and structured into the peace agreement.14 President Sadat acquiesced, claiming that the US held ‘99 per cent of the cards’.15 He adopted the Camp David formula tying aid and peace with the need for normalised relations that would enable cooperative arrangements to develop regional resources.16 Since then, the dominant discourse has held that comprehensive peace will serve as the basis for prosperity and regional development. Aid monies flowed into Egypt. According to a reputable study by economist Salah Gouda at Markaz al-Dirasat al-Iqtisadiyya, between 1982 and 2010 Egypt received a total of US$ 63 billion from the US, followed by Japan (US$ 32 billion), Saudi Arabia (US$ 26.3 billion), the United Arab Emirates (US$ 19.5 billion), Kuwait (US$ 15.3 billion), Canada (US$ 13.5 billion) and others.17 Decision making and implementation regarding the above strategy of aid, peace and regional development were limited to ideologicallyenlisted individuals among the political and business elite who were friendly to normalised relations with Israel. There was no formalised public debate on future direction, confrontations, priorities, enemies and so forth, either through a democratic process or through the traditional statist-nationalist inclusive framework.18 In fact, several among Sadat’s team of negotiators at Camp David resigned their positions at the Ministry of Foreign Service in objection to Sadat’s needless, in their opinions, concessions. Among those who objected to Sadat’s unilateral decision making and concessions were General, and later Minister of War, Muhammad ‘Abd el-Ghani al-Gamsi, who had participated in the 1973 War and, also, Egyptian Foreign Minister Muhammed Ibrahim Kamel, who tendered his resignation in protest before the conclusion of the negotiations.19 The normalisation-friendly segment of the ruling elite was incapable of consensually dominating significant portions of the intelligentsia, labour and the general populace.20 The spaces in state and public institutions where the process of convincing could take place were increasingly weakened by privatisation. The enlisted elite did not create a receptive and incubating environment for the normalisation (warm and

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comprehensive) dimensions of peace. In addition to people who were opposed to coming under the US sphere of influence and the peace on principle, an increasing number of people no longer believed that the trickle-down promises of reforms and peace would materialise or that they would ever benefit from the new policies. Because the privatising method was fundamentally focused on profit and/or strategic policy alignment, the related political process of ideological incorporation was secondary, at best. It was actively resisted by many in the intelligentsia and by labour (as evidenced by the rise in labour activism after 2005) and eventually gave rise to protest networks like Kifaya and Shayfeencom. The occasional anti-Israel rhetoric of Mubarak stayed within the above framework and was intended by the regime to counteract opposition to progress on alignment with US policies and on normalisation of relations with Israel. Even though the rhetoric was in tune with popular sentiment, it rang hollow. It was consistently belied by the regime’s compliance with the US agenda. During Mubarak’s rule, Egypt not only gave diplomatic cover for the US invasion of Iraq, it also sent troops to participate alongside the ‘Coalition of the Willing’.21 Later, in 2009, when the US was increasing pressure against Iran, Hamas and Hizbullah in Lebanon, the regime discovered and arrested a secret ‘Hizbullah cell’ that was allegedly planning to overthrow Mubarak and launch attacks against Egypt and Israel in Sinai.22 According to CNN, a 2009 cable noted that with ‘the discovery of a Hezbollah cell in Egypt, the Egyptians appear more willing to confront the Iranian surrogates and to work closely with Israel’.23 To that end, the cables describe the Mubarak government as a helpful partner in stopping smuggling into Gaza from Egypt. A cable from 2008 quoted a senior Egyptian military figure saying that Egypt had spent approximately US$ 40 million to purchase the steel for an underground wall on the Gaza border, ‘and Egypt was paying the cost of this wall in terms of public opinion both within Egypt and the region’.24 Riot police encircled and quashed peaceful demonstrations against the Israeli siege of Gaza.25 Moreover, the Israelis consulted with Mubarak prior to ‘Operation Cast Lead’ against Gaza in 2008– 9 and Mubarak stayed silent about the upcoming attack.26 The US continued and strengthened its relationships with the regime in the military, security and economic spheres despite the occasional rhetoric. Meanwhile, the US dismissed anti-Israel media and

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political party discourse as mere ploys to counter Mubarak.27 Whenever Mubarak increased his anti-Israeli tone, the Americans understood the manoeuvre as purely intended for domestic consumption, as did the Israelis.28 Anti-Israeli rhetoric was also useful whenever the regime was embarrassed, as happened with the release of WikiLeaks documents revealing news of intelligence sharing with the Israelis.29 The fact that there was a need to employ such rhetorical devices is indication of the underlying sentiments among the majority of Egyptians. Nevertheless, for aid to continue as well as to try to secure American approval of his son Gamal’s succession,30 Mubarak felt that he needed the Israelis. He specifically referred to using Israel’s influence in Washington for his own purposes, alluding to the role that pro-Israeli lobbyists often played in helping secure aid for American allies in Egypt.31 Feeling that the road to Washington lay through Tel Aviv, Mubarak emphasised his role as a broker in the Israeli –Palestinian peace talks and on the talks with Hamas.32 Aid’s contingency of expanding the peace with Israel relied on private routes among incorporated and/or incorporable power holders in the regime, in state institutions as well as in the private sector. Egyptian and other foreign elites could work from within their respective countries to re-orient national sovereign policies. This ensemble of relationships sidelined opponents of Israel and superseded extant and more qualified or nationalistic figures, authorities, local knowledge and institutional competences. Theoretically, the strategy of manoeuvring around opponents performs a similar function to Gramsci’s description of transformist politics, namely, ‘absorption of the enemies’ elites [. . .] their “decapitation” and annihilation for a very long time’.33 The approach helps preempt existing, alternative and emergent community-focused oppositions that might challenge the geostrategic and economic status quo. Transformismo,34 not reformismo35 was the aim and method of privatisation and of partnership with ‘natural allies’. The manner in which Gramsci used the term reformismo differs from contemporary (often neoliberal) connotations of reforms. Gramsci’s reformism refers to (anticipated) revolutionary rule by the proletariat and constitutes true Gramscian hegemony. However, Gramsci’s approach to hegemony had much latitude, allowing for temporal evolution. Therefore, the historical juncture of state rule by the bourgeoisie who legitimise their rule by

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consensual domination also constitutes a form of hegemony – but is considered temporary.36 Likewise, transformismo is a historicised phenomenon for Gramsci. One of the possible (historical) phases of transformism is described as featuring ‘molecular’ incorporation of individual political figures into the (conservative) political class. This class is averse to mass popular political engagement that might challenge their dominance.37 Consequently, governance during that phase consists in preserving the status quo by excluding social forces and using co-opting mechanisms. Critical theorists discussing hegemony in contemporary IR are mostly concerned with the present historical phase, in which the bourgeois state predominates consensually through pluralist democratic politics but where resistances may and do arise.38 According to Schmidt and Hersh, reformismo rejects the hegemony of the ruling elite, which it views as acting like a ‘transmission belt’ for the interests of international capital.39 Transformism in Egypt, however, was not legitimated by democratic politics. Changes that affected the State’s relationship with society, including privatisation of public enterprises, had few formal (political) checks. Implementation and execution of reforms relied on a targeted (autocratic and/or well-positioned) elite who were the best positioned to benefit from an autocratic system. Therefore, counter-intuitively, reforms and the implementation of international norms were susceptible to becoming new routes for private predation, either from within the State or from those allied and/or doing business with the State. Transformism – or ‘molecular incorporation’ of amenable leaders – as a method was especially effective in an autocratic system because it enabled the circumvention of opposition to US strategy. On the one hand, this method minimised risk to the social and institutional underpinnings of the international and regional status quo, which required stability and security for aid to achieve the comprehensive peace objective. On the other hand, the aid process (and privatisation) favoured segments who desired or benefited from increased integration with US strategic policies and goals in the region, marginalising dissident voices. Needless to say, these effects diminished consensual intellectual and moral hegemony in the wider society. Most of the economists covered in this chapter read official data as social documents, narrating government policies vis-a`-vis long-term national and societal priorities. The theme of national progress

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configured in competing and interacting discourses. Official rhetoric stressed slow, limited democratisation and speedy, wide-ranging economic reforms. The definitions of ‘national’ and of ‘progress’ varied significantly depending on the actor. For example, Minister of Agriculture Youssef Wali was one of the main promoters of normalisation as a path to national progress. He implemented wideranging agricultural reforms, business deals, exchanges and so forth with Israel. Yet even from within the same ministry, others were not as keen to openly admit such normalised relations. Minister Amin Abaza, who followed Wali, denied that agricultural relations existed – although he exempted the ‘area of research’. Meanwhile, Egyptian newspapers were critical of normalisation. Investigative pieces contradicted Abaza’s assertions by publishing Israeli press accounts with details of hundreds of cooperative agricultural projects.40 Intellectual critics viewed normalisation as bordering on treason and as subordinating (not in the national interest and anti-progress). Anti-normalisation conferences launched in 2001 included activists, intellectuals and professionals in various ministries, syndicates and state institutions and so forth.41 Various scandals associated with Agriculture Minister Youssef Wali’s policies, such as widespread press reports about the importation of internationally-banned carcinogenic fertilisers from Israel, became leading themes in opposing the Mubarak regime.42 There was a disjuncture between popular attitudes towards normalisation and the enthusiasm for normalisation among the ruling elite and the associated business class elite.43 One prominent example was that of Ahmed ‘Ezz, a (crony) capitalist investor who, thanks to privatisation, had monopolised the cement and steel industries. He and other business elite like him were officially touted as contributing to national progress by attracting foreign investments. Regime critics, however, criticised these individuals for price gouging and for diverting production to build the Separation Barrier in Israel, causing a crisis in the local markets for lack of product.44 Thus, while the regime used the framework of national progress to justify policies that satisfied the conditions for the continued provision of aid, critics of the regime used a narrative of restoring and updating a lost national progress that included historically acquired rights, social justice, inclusive economic development and a greater say in the articulation of state policies that affected people’s lives.

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The less-than-stellar effects of free market policies and the socioeconomic counter-discourse that they provoked provide insight into the reasons and mechanisms that destabilised the regime. Because alignment with US objectives is not just economic but also political, the major theme reiterated by oppositional critics of the regime emphasised that aid represents and effects subordination (taba‘iyya) to the United States and to an ‘American–Zionist agenda’. This theme is manifest among diverse people, including: ‘Imad Gad, Director of Political Studies at Al-Ahram Center for Political and Strategic Studies and President of the Parliamentary bloc for the Egyptian Social Democratic Party (ESDP); Rif‘at Sayyed Ahmed, founder and Chairman of the Yafa Center for Strategic Studies and Kamal Khalil, founder of the main independent political party representing labour and peasants (Hizb al-Haraka al-‘Ummaliyya wa alFallahiyya), who was the inspiration behind the slogans of the January 25 Revolution and was imprisoned and tortured as an activist 20 times by the Mubarak regime. These critics viewed normalisation as the fruit of an unfortunate, exceptional and sad moment in Egypt’s history. They felt that the Peace Treaty at Camp David undercut what they perceived as a historical victory (in 1973) that had united Arabs for a time. By submitting to the US role as prime arbiter, President Sadat dissipated the gains from war and fragmented Arab relations.45 The economic repercussions of US aid and its associated globalisation were also, according to many critics, a form of snatching defeat from the jaws of victory. An edited collection by Egyptian intellectuals charged that the globalisation that was being implemented in Egypt was perceived as disguised Americanization, featuring Egypt as the ‘Other’ in a ‘discourse under the gun’.46 Al-Naggar argued that the whole process of liberal economic reforms, including tying the Egyptian pound to the US dollar, floating the currency, privatisation and so forth, occurred ‘under pressure’ and helped the United States and Israel more than Egypt.47 Nawwar described aid-induced globalisation as a process of ‘emptying the national identity’ (tafrigh al-hawiyya al-wataniyya).48 Other prominent intellectuals, such as Galal Amin and Suheir Morsy, described US aid as promoting dependence (taba‘iyya) instead of development.49 Amin went so far as to characterise US-led globalisation as ‘globalising oppression’ (‘awlamat al-qahr). In Egypt, aid provided a means of ‘rule from afar’ (tahakkum ‘an bu‘d) ‘forcing obedience’ (irgham

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‘ala al-ta‘a) and rendering Egypt ‘an American colony’.50 According to Amin, what enabled the American ‘colonisation’ of Egypt is that aid and its attendant conditions were negotiated when Sinai was occupied and Egypt was enchained. Camp David, the consequent aid and policies of Infitah merely harvested the crop of occupation by making the Egyptian economy dependent. The most critical discourse included political party publications of alTajammu‘,51 the Revolutionary Socialists52 and the Nasserite Party53 as well as of think tanks such as the Al-Ahram Center for Political and Strategic Studies and the Nile Center for Economic and Strategic Research. These publications noted the counterfactuals: for example, that the longest growth cycle enjoyed by Egypt occurred during the 1960s and was accompanied by policies to redistribute wealth and to help the poor. These facts contradicted neoliberal orthodoxy which denigrates a leading government role in the economy and in social welfare as undermining the chance for real growth while posing the free market as the only chance for growth and development.54 In contrast, economic nationalism, even if hidden within capitalist discourse, produced the benchmarks against which the outcomes of aid, the free market and normalised relations with Israel were judged domestically. For many on the left, national fundamentals surviving from the Nasserite era outweighed other potential affiliations. For example, Jewish Communist Party member and a co-founder of the Al-Tajammu‘ Party Shehata Haroun objected to the privatisation of the steel and cement industries, especially because ‘it was Egyptian cement that built the separation wall in Occupied Palestine’.55 The Nasserite era provided a ‘national’ set of historical precedents against which to compare and contrast the present. For example, the average growth rate of Egypt was 6 per cent in the 1950s, 8.3 per cent from 1960 to 1965 and 6.8 per cent from 1965 to 1980.56 While the 1970s experienced a growth rate of 9.5 per cent, these rates were dependent on an excessive amount of debt. Egypt had only US$ 2.8 billion in debt at the end of the 1967 war, a figure that grew to US$ 21 billion by the end of Sadat’s rule in 1980.57 Not only were growth rates higher than during the Mubarak era (4.3 per cent average growth from 1983 to 2010), they also occurred at a time when Egypt had fought three wars. While the 1990s were the high point of growth, this was largely due to non-economic reasons mainly having to do with the cancellation

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US ECONOMIC AID IN EGYPT

of a large portion of Egyptian foreign debt for supporting the Iraq War. Alleviating the deficit in the balance of payments enhanced growth in GDP.58 In contrast, the Nasserite era had featured what is popularly considered ‘good debt’ that had built productivity-enhancing projects like the Aswan High Dam and the iron and steel complex in Helwan. Both were funded by the Soviet Union at low interest rates and without intervention or conditions specifying how to spend the aid. Thus, Egypt had independently set and pursued its own national priorities.59 Intellectuals and economists such as Ahmed al-Sayyed al-Naggar lauded the role that the State had played in national development, especially industrialization.60 For example, the State became the prime investor, financing 90 per cent of all new industries, which raised industrial investment to almost 20 per cent of GDP, lasting until the mid-1960s.61 Such discourses use historical narratives and national statistics to attest to the relatively larger jumps in industrial production, investments, growth and education in the past. Nevertheless, while Nasser was credited with preventing corruption, lack of democracy was noted as the Achilles heel of the Nasserite experiment, since it formed the basis for subsequent bureaucratic capitalism – a form of disguised privatisation.62 The Nasserite processes of ‘Egyptianisation and nationalisation’ (al-tamsir wa al-ta’mim) differed from the contemporary processes of implementing reforms and peace/normalisation. ‘Egyptianisation and nationalisation’ not only targeted Egyptian development but also countered inherited class contradictions from the colonial and monarchical era. According to al-Naggar, the capitalist class of the pre-revolutionary period was highly influenced by, or dependent on, foreigners. In contrast, the aid-driven process of alignment via privatisation utilised these very same contradictions and foreign linkages within the capitalist class and the ruling and administrative elites. The results were such that, according to High Constitutional Court Judge Tahani al-Gebali, the post-Nasser period became one of gradual erasure (tajrif), or marginalisation, of the people (al-sha‘b), creating political, social, economic and cultural defects (ikhtilal). Al-Gebali continued that: Egypt was targeted (mustahdafa) by regional and international powers and was mortgaged (murtahana) to the IMF and World

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Bank. Wealth was concentrated in the hands of a few; the constituent factors of foundational characteristics of ‘the Egyptian personality’ were ‘assassinated’; and national cultural awareness and education were absented, thereby opening the space for religious extremism. Ultimately, Egypt retreated from its leading position in the Arab world.63 The domestic debate connected the dominant economic orthodoxy on neoliberalism and privatisation with the effects of that orthodoxy as viewed from a national societal (not globalising) perspective. First and foremost, the theme of ‘squandering public wealth’ (ihdar al-mal al-‘am) dominated the debate and centred on the socially widespread belief, thanks to the Nasserite legacy, of public ownership of national resources and of social wealth. A connected theme insisted on a nationally-based and -authored course for development. Reforming and retaining the public sector would ensure that national development was independent (mustaqilla) and that the national will would refuse subordination/ following (taba‘iyya). The three themes are neither exclusively reformist nor transformist, but rather focused on the questions ‘On whose terms do privatisation and economic reforms occur?’ and ‘Whom do they benefit in the long run?’ Reforming what is broken (without necessarily departing from a more capitalist path) was proposed as a solution to supplant the unloading of public sectors via (forced) privatisation.64 The above themes were interconnected conceptually and socially. They held appeal for wide sectors of society and resulted in engagement and activism from diverse quarters, engendering legal and labour challenges, professional and administrative opposition and intellectual debate in the media.

Privatisation, cui bono? Claims and counterfactuals Most research on privatisation yields ambiguous results.65 This is partly due to the different types of privatisation and variations in local conditions. In Egypt, a favoured method of privatisation was the sale of public assets to a strategic investor. Another was share issue privatisation by offering stock on the stock market and vouchers to public enterprise employees.66 While the rhetorical goal of privatisation is frequently the expansion of ownership of the assets in society,

94

US ECONOMIC AID IN EGYPT

most experiences with privatisation indicate that this goal is not attainable where capital markets are not well developed and where income distribution is very unequal.67 Under these circumstances, transaction costs are higher and underpricing is likely because there are not enough buyers. In Egypt, problems with underpricing were made worse by a regime policy of tadlil al-mustathmer al-ajnabi (coddling/ protecting the foreign investor).68 Another purported goal of privatisation is that it will yield improved productivity and efficiency. In contrast, the Egyptian experience echoed the Russian and Latin American experiences in transitioning to free market economies: privatisation was accompanied by corruption scandals. Privatisation under non-democratic conditions opened the process to even worse corruption than had existed in the public sector. Undervaluation by strategic investors or groups of investors with insider knowledge and with access to the political centre of power was a feature of several prominent divestitures.69 Undervaluation was a built-in potentiality since divestitures satisfy the conditional terms imposed by international financial institutions that regularly assess economic performance before the disbursement of further credit. To fall within a target band of permissible budgetary or trade deficits as a percentage of GDP, the credit recipient is (indirectly) structured to lean towards privatising public sector assets in order to generate revenue. The fact that progress on privatisation opens the door to more credit means that it indirectly encourages an increase in overall indebtedness. Increased debt often means increased interest payments, which, in turn, increase the pressure to divest public assets. Worse, the easiest firms to privatise under these conditions are the most profitable since they are the ones most likely to attract investors.70 Smaller budget deficits and, better yet, surpluses, are generally considered by today’s dominant mainstream neoclassical economic theory (currently called the Chicago School), as positive goals for an economy.71 Alternatively, Keynesian economic perspectives generally have a more positive evaluation for the role of government spending, especially when there is an inefficient private sector and when there are needs to stabilise economic output.72 A variant, Ricardian view argues that national debt is not always harmful to the economy.73 When there is insufficient excess saved domestic capital that may be used for investments, then there may be a need for the State to assume a greater

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role in development. Otherwise, foreign capital will out-compete domestic capital. This situation applied in Egypt, which experienced a decline in national savings. According to IMF World Economic Outlook, 2012 (Table 2.1), national savings declined from 22.3 per cent of GDP in 1995 to 17.5 per cent of GDP in 2010. Egyptian economic critics of the regime such as al-Naggar are generally Keynesian in outlook, holding that budget surpluses are a means and not a goal. For them, the temptation to use privatisation as a means to fix budgetary deficits diverts funds away from new investments in productive physical assets and ultimately results in the exchange of real assets for monetary infusions/paper assets.74 The pressures to meet foreign obligations and conditions produced structural and behavioural changes that facilitated, deepened and accelerated adherence to creditors’ preferences. A prominent structural repercussion of the above was manifest in the merging of the Ministry of Public Enterprise with the Ministry of Finance. Institutionally, the merger forged a partnership between a particular type of elite – at the crossroads of business, government, executive power and international globalising institutions. The merger of the two ministries created a built-in drive to privatise the public sector and to sell it to foreigners so as to close budgetary gaps. One category that was strongly affected was the petroleum and natural gas sector.75 Not only would these outcomes defeat the theoretical claim that privatisation would make firms profitable but they also potentially hinder national progress in the areas that do work. The US included privatisation targets in its Memorandum of Understanding (MOU) agreements with the Mubarak regime. Meanwhile, intellectually- and economically-enlisted power holders were eager to initiate and execute in line with ‘good corporate governance principles’. WikiLeaks cables attest to this dynamic. One US embassy staff report stated that: Since taking office in July 2004, Prime Minister Nazif’s administration has reinvigorated the GOE’s program to privatize state-owned industries. Under the leadership of the new Ministry of Investment, the revitalized program aims to speed up privatizations by making public enterprises more efficient – and thus more attractive to potential investors – while also introducing good

96

US ECONOMIC AID IN EGYPT

corporate governance principles. The effort has paid off for the GoE, which completed a total of 19 privatizations from July 2004 to March 2005, generating LE 2.9 billion (US$ 500 million) compared with five transactions generating LE 81 million (US$ 14 million) in the period July 2003-March 2004. The GoE has promised even bolder steps in the near future for divestiture of formerly ‘strategic’ industries [. . .] The GoE privatization program has undergone a complete makeover in concept and implementation in the last year under the Nazif administration’s new Ministry of Investment (MOI). Minister of Investment Mahmoud Mohieldin has been the driving force behind revitalization of the program, which he refers to as ‘asset management’. Mohieldin has used his political weight, as a key member of the National Democratic Party (NDP) economic policy apparatus, to garner support for broadening the scope of the program to include all public enterprises, the more competitive companies as well as those with large workforces that could be negatively affected by privatization. He has made privatization a focal point of the macroeconomic reform effort led by the Minister of Finance, the Minister of Foreign Trade and Industry and Nazif himself, all of whom agree on the goals of stimulating private sector-driven growth and ‘marketing Egypt’ as a destination for foreign investment [. . .] As noted above, MOI has included in the privatization program companies that were not previously slated for sale. Prior administrations considered certain companies ‘cash cows’ that were too valuable for the GoE to sell. Likewise, certain sectors, such as petrochemicals and telecoms, were considered ‘strategic’ and therefore off limits to private ownership, especially foreign private ownership.76 That Nazif promised bolder steps to divest the State of ‘strategic’ industries and that Minister of Investments (MOI in the cable above) Mohyeddin described this programme of privatisation as ‘asset management’ attests to a certain disingenuousness. In effect, the autocratic regime ‘managed’ public enterprises successfully enough by implementing transparency and corporate governance principles prior to privatisation so as to make SOEs (and ‘cash cows’) even more attractive to investors; yet the regime did not consider retaining them for the public that owned them in the first place.

Gross domestic product, current prices Gross domestic product, deflator Gross domestic product per capita, current prices Total investment Gross national savings Inflation, average consumer prices Volume of imports of goods and services Volume of exports of goods and services Value of oil imports

0.849

US$ billions

2.388

9.661 2.55

27.854

3.975

9.225

17.124

5.359

8.171

13.017

4.128

12.116

9.734

10.952

9.561

15.124

23.595

11.704

2 3.07

2 5.508

5.161

2 5.221

2 0.254

7.032

11.703

19.501 17.525 16.243

19.19 16.844

210,294

218,465

10.562

9.425

4.198

22.39 22.937

190,991

188,608

per cent change

0.417

8.802

20.851 22.592

171,777

162,435

11.685

8.106

18.731 20.362

153,094

130,346

per cent change

2.849

17.976 21.217

135,967

107,375

9.361

16.938 21.276

126,646

89,794

per cent change

19.553 18.38

119,238

78,802

19.608 22.331

95,883

99,155

per cent of GDP per cent of GDP

2010

1,057.35 1,566.42 1,148.71 1,282.77 1,505.96 1,771.00 2,160.04 2,452.63 2,775.92

2009

US$ units

2008

76,831

2007

Index

2006

60,163

2005

US$ billions

2004

1995

Scale

2000

General statistics, Egypt, 1995 –2010

Country/seriesspecific notes

Table 2.1

Scale 2,273 8.995 63.3 n/a n/a 0.00 n/a

56.9 n/a n/a

0.00 n/a

2000

2,176 11.176

1995

n/a

0.00

70.988

68.6 33.853

3,91 10.526

2004

n/a

0.00

71.036

70 33.246

5,013 11.468

2005

9.169

56.37

71.366

71.3 37.766

7,413 10.917

2006

7.642

56.54

64.489

73.6 35.266

7,399 9.205

2007

Source: data extracted from IMF World Economic Outlook Database, International Monetary Fund.

Value of oil exports US$ billions Unemployment rate per cent of total labour force Population Persons/millions General government per cent of GDP total expenditure General government per cent of GDP net debt General government National structural balance currency/billions General government per cent of structural balance potential GDP

Country/seriesspecific notes

Table 2.1 Continued

8.317

73.371

55.564

75.2 35.787

11,207 8.676

2008

6.846

71.126

58.746

76.9 34.472

7,91 9.367

2009

7.785

94.222

60.033

78.7 32.986

8,033 9.185

2010

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Another neoliberal tenet is that privatisation eases the strain on government budgets.77 Research has shown that when a country suffers from large debt, privatisation offers an easy method for the government to finance fiscal deficits. Dr Hazem el-Beblawi, former Assistant Prime Minister and Minister of Finance to Egypt, argued that the financial liquidity that can be attained through privatisation is of equal importance as growth, in that it serves to stave off or eliminate the need to sell off even more assets. In general, Dr el-Beblawi was in favour of the IMF recipe, if it was ‘done right’.78 Critics charged, however, that instead of being an engine of growth, privatisation perpetuates fiscal indebtedness as well. Under the Nazif government, the deficit grew from LE 56.37 billion in 2005 to LE 94.22 billion in 2010. (See ‘General government structural balance’ in Table 2.1.) A more positive development was that net debt as a percentage of GDP fell from 71 per cent in 2004 to 60 per cent in 2010 (also a positive development for foreign creditors). However, this decline in foreign debt was offset by an increase in domestic debt.79 Domestic debt rose partly as a result of privatisation.80 In many cases, the State assumed the debt of privatised firms via the instrument of holding companies, while the productive assets and revenue streams were privatised. Internal domestic debt grew steadily after the wave of privatisation was accelerated, from LE 217 billion at the end of the Ganzouri government, to LE 434 billion at the end of the ‘Ebeid government, to finally reach LE 863 billion at the end of the Nazif government.81 In comparison, when Mubarak became president in 1981, domestic national debt was only LE 4 billion.82 In addition to the above domestic debt are the separate debts of government agencies such as the Egyptian General Petroleum Corporation (US$ 3 billion).83 Because the legal and political frameworks for public oversight and accountability were weak, loans were granted to regime-connected businessmen and politicians, some of whom were Egyptian –American, such as Mahmoud Wahba, founder of the Egyptian American Business Association, based in New York.84 Some used the funds to obtain state-owned businesses, land and so forth, only to abscond with the loans and/or to simply transfer the capital out of the country. (Wahba, for instance, escaped to the US with US$ 387 million, without repercussions.85) In 2004, the Central Bank estimated that about 14 per cent of loans were suspect in their entirety, and the

100

US ECONOMIC AID IN EGYPT

number was greater if unrealised interest on loans was included. A very limited number of private sector clients received 40 per cent of the loans, with little to no collateral. Some of these clients were foreign firms, made possible by build-operate-transfer (BOT)86 arrangements that were permitted by the new laws introduced by Nazif. According to the Central Bank, 70 per cent had no collateral, raising questions about its role as overseer87 – including the quality of the newly instituted transparency and governance standards. This privatisation – debt dynamic was perceived by critical economists as privatisation under the gun – succumbing to blackmail by the US, the IMF and other creditors. Internationally, IFIs made privatisation a goal and condition to facilitate the acquisition of debt and debt service payments.88 According to the World Bank, total external debt increased from US$ 19.13 billion in 1980 to US$ 36.54 billion in 2010 (in current US dollars).89 Free market reforms also had contradictory effects regarding the burden of debt service. According to the Central Bank of Egypt, debt service grew from US$ 1.9 billion in 1995 to US$ 2.618 billion in 2010, most of which is owed to the Paris Club or to international financial institutions. As a percentage of GDP, however, external debt fell from 54.5 per cent in 1995 to 15.9 per cent in 2010.90 The trade account was similarly affected post-privatisation, since the revenue streams were no longer pouring into government coffers. Egypt’s balance of trade was consistently negative throughout.91 A trade surplus equal to 4.3 per cent of GDP when Nazif was appointed in 2004 turned into a 2.4 per cent deficit towards the end of 2009.92 Moreover, Egypt’s top trading partners were consistently the US and the EU. According to the Central Bank, for most years under review the EU was the leading export destination until fiscal year 1996/7, with the US taking the top spot between 1997 and 2004. In contrast, exports to Arab countries were relatively much smaller but did increase from 11 per cent to 20 per cent. Similarly, most Egyptian imports came from the EU, with the US in second position until 2009. Imports from Arab countries trailed imports from Africa, which themselves represented less than 4 per cent of total imports in 1995, increasing to 11 per cent by 2010.93 Imports and Exports, as tabulated by the Central Agency for Public Mobilization and Statistics (Table 2.2), show that total trade (exports and imports) grew almost sevenfold between 2001 and 2010. Exports

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101

Table 2.2 Imports and exports according to the Central Agency for Public Mobilization and Statistics, Egypt, 2001 – 10 (in LE) Year

Exports

Imports

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

16,490.841 21,145.475 36,811.897 47,677.801 61,618.140 78,863.719 91,255.903 143,026.700 128,489.938 154,850.399

50,659.141 56,482.191 65,082.712 79,706.798 114,687.527 118,483.176 152,586.331 287,759.032 249,965.115 300,361.020

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (data treated and classified by Egyptian International Trade Point (EITP)).

grew 9.4 times while imports grew 5.9 times. On the surface, the numbers indicate a surplus that started in 2005. More detailed examination reveals that the surplus is questionable due to the peculiar (WB and IMF imposed) method of accounting for oil, namely that before 2005, oil exports were recorded without including the proceeds to the foreign partner. At the IMF’s insistence, Minister Mohyeddin instituted the practice that exports by foreign-owned/privatised oil companies should be recorded as national exports even when the revenues were repatriated. This new accounting doubled exports in one fell swoop.94 Meanwhile, imports of petrochemical components that were purchased in dollars from a foreign partner were not registered as imports. With the new accounting, exports appeared as almost double what they otherwise would have been. According to el-Beblawi, in reality ‘Egypt is a deficit country in oil and energy’.95 IMF statistics reflect this ‘positive’ economic development. IMF numbers (Table 2.1) reflect the oil revenue ‘surplus’ starting in 2005.96 In terms of political economy, proponents of privatisation argue that it would both improve accountability and profits and also enhance civil liberties and more democratic government. They reason that privatisation ends sole state control over socio-economic power bases

102

US ECONOMIC AID IN EGYPT

and removes the principal–agent moral hazard problem. Thereafter, according to proponents, political reasons would not determine economic decisions, which would alleviate corruption and improve profitability.97 If corruption does occur, proponents hold that it would only be a singular occurrence during the privatisation process, which would not affect the future profitability and cash flow of the company.98 The Egyptian experience seems to run counter to the above rationales. Regime insiders and interlinked business elites formed pockets of exclusive power (client capitalists) within state institutions and in business empires that could exploit government subsidies, insider knowledge, accounting loopholes and so forth. In addition, they either were the market (market makers) or could influence it. The regime did not diverge from the neoliberal recipe until a few years after financial scandals multiplied in conjunction with the accelerated pace of privatisation under the Nazif government. (See Tables 2.3 and 2.4 for a list of all privatisations dating between 1993 and 2008.) Prior to that, privatisation proponents like Prime Minister ‘Atef ‘Ebeid boasted that the World Bank ranked Egyptian privatisation as the fourth best in the world while simultaneously denying the existence of corruption.99 At the top government levels, privatisation was a decisional (exceptional/arbitrary power) and not an institutional-procedural process. According to Assistant Minister of Investment Ahmed Abu Zeid,100 decisions for privatisation were made entirely by Mubarak himself and by the top echelons in his government. The choice, pricing and timing were decided upon by the Ministry of Finance, the Central Bank and Mubarak. Early privatisation of public sector enterprises, according to R.S. Ahmed, occurred under Prime Minister ‘Atef ‘Ebeid and coincided with the arrival of Gamal Mubarak (working for the Bank of America in London) on the financial scene.101 Gamal Mubarak bought Egyptian debt, initiating the ‘Americanisation’ of the economy (amrakat al-iqtisad). Contrary to institutional appearances, pricing was not the domain of the Ministry of Investments. According to Abu Zeid, Gamal Mubarak weighed in with recommendations but these were not always followed. Abu Zeid asserted that the MOI (currently Executive Director at the World Bank) Mahmoud Mohyeddin’s role was to sign off on the deal, not to impede it. As Assistant Minister, Abu Zeid was tasked with researching, evaluating and proposing the merits or demerits of possible

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services

1994

1994

1994

1994

1994

1993 1993

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Deal type

19.17

13.29

7.07

4.68

2.38

0.60 0.49

0.51

0.06

116.00

Proceeds

Cement

Cement

Chemicals

Manufacturing

Manufacturing

Unknown Tourism/travel agency

Cement

Chemicals

Banking

Real sector

`

AND

Helwan Portland Cement Alexandria Portland Cement

Manufacturing and services Manufacturing and services Other Services

1993

1993

Financial

1993

Commercial International Bank Abu Kir Fertilizer and Chemical Company Suez Cement Company (SCC) Khopho Center Co. Crocodile Tourist Project Co. (Jolie Ville Luxor) Alexandria Spinning and Weaving United Arab Spinning and Weaving Misr Chemicals

Sector

Year

Privatised companies in Egypt, 1988 – 99 (US$ million)

Company name

Table 2.3

PRIVATISATION PEACE' BY PARTNER ALLIES 103

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services

1994

1994

1994

1995

1995

El Nasr Bottling Co.

Paints and Chemicals

El Nasr Clothing and Manufacturing Co. (Kabo) Heliopolis for Housing and Dev. Alexandria Pharmaceuticals Egypt, Arab Rep.ian Electric Cables Co. Eastern Manufacturing

1995

1995

1995

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services

1994

Egypt, Arab Rep.ian Bottling Co. Tourah Portland Cement

Sector

Year

Continued

Company name

Table 2.3

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Direct sale

Public offer

Direct sale

Deal type

163.70

23.00

8.44

7.58

7.12

119.64

95.12

68.59

46.00

Proceeds

Agriculture

Engineering

Pharmaceutical

Construction

Manufacturing

Beverage producer/ distrib. Chemicals

Cement

Food processing

Real sector

104 US ECONOMIC AID IN EGYPT

Extracted Oils and Derivatives Co. North Cairo Flour Mills Ameriya Cement United Housing Egypt, Arab Rep. Arab African Bank Alexandria Kuwait International Bank Heliopolis for Housing and Development Medinat Nasr Housing and Development Development and Popular Houses Commercial International Bank Egypt, Arab Rep.ian American Bank Alexandria Pharmaceuticals and Chemicals

Other

Other Primary Financial Financial

Financial

Financial

Financial

Financial

Financial

Financial

Manufacturing and services

1995

1995 1995 1996 1996

1996

1996

1996

1996

1996

1996

1996

Public offer

GDR (secondary issue) Public offer

Public offer

4.01

120.00

63.54

56.08

22.91

20.60

28.97 7.87 0.86 4.00

14.95

Chemicals

Banking

Banking

Real estate

Real estate

Real estate

Banking

Food Metals Real estate Banking

Food

`

AND

Public offer

Public offer

Public offer Public offer Public offer

Public offer

PRIVATISATION PEACE' BY PARTNER ALLIES 105

Cairo Pharmaceuticals and Chemicals Middle Egypt, Arab Rep. Flour Mills

Memphis Pharmaceuticals and Chemicals Nile Pharmaceuticals

El Nile for Matches and Prefabricated Houses South Cairo Flour Mills

1996

El Nasr for Dehydrating Agri. Products Arab Pharmaceuticals and Chemicals Kafr El-Zayat Pesticides

1996

1996

1996

1996

1996

1996

1996

1996

Year

Continued

Company name

Table 2.3

Manufacturing and services Manufacturing and services Manufacturing and services

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services

Sector

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Public offer

Deal type

19.00

18.26

16.44

14.02

8.56

8.30

7.57

5.38

5.16

Proceeds

Milling

Chemicals

Chemicals

Chemicals

Milling

Construction

Chemicals

Chemicals

Manufacturing

Real sector

106 US ECONOMIC AID IN EGYPT

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Other Primary services services Infrastructure

1996

1996 1996 1996 1996 1996

1996

1996

1996

1996

1996

1996

Manufacturing and services

1996

Public offer Public offer Public offer Anchor investor Public offer

Public offer

Public offer

Public offer

Public offer

43.74 102.16 10.84 146.69 11.52

144.48

81.47

52.24

49.00

32.43

32.11

27.51

Public offer Public offer

21.00

Public offer

Storage Metallurgy Industry Tourism Telecommunications

Cement

Manufacturing

Milling

Milling

Manufacturing

Milling

Manufacturing

Chemicals

`

AND

Helwan Portland Cement Storage and Silos Ameriya Cement Arab Ginning Cairo Sheraton Telemisr

Upper Egypt, Arab Rep. Flour Mills Middle and West Flour Mills Al Ahram Beverages

East Delta Flour Mills Co. Misr Oil and Soap

Egypt, Arab Rep.ian Financial and Industrial Co. Starch and Glucose

PRIVATISATION PEACE' BY PARTNER ALLIES 107

Manufacturing and services Manufacturing and services

1997

Paints and Chemical Industries (Pachin)

Manufacturing and services Manufacturing and services

1997

1997

1997

1997

Manufacturing and services Manufacturing and services

Financial

1997

1997

Financial

1997

Cairo Housing and Development Cairo Housing and Development Chloride Egypt, Arab Rep. Nubareya Agricultural Engineering and Mechanization Middle East Paper Company (Simo) Misr Mechanical and Electrical industries Company (Kahromica) Alexandria Flour Mills

Sector

Year

Continued

Company name

Table 2.3

Public offer

Public offer

Public offer

Public offer

Public offer

Private sale

Public offer

Private sale

Deal type

49.00

29.20

22.00

14.60

6.00

4.00

15.20

11.90

Proceeds

Chemicals

Flours Mills

Mechanical and industrial

Paper

Engineering and Mechanisation

Chemical

Real estate

Real estate

Real sector

108 US ECONOMIC AID IN EGYPT

Paints and Chemical Industries (Pachin) Giza General Contracting Alexandria Commercial and Maritime Bank Misr Free Shops al-Nasr Castings Company Egypt, Arab Rep.ian Electro Cables (Kabelat) Delta Industrial Company (Ideal) Eastern Company Mahmoudiya General Contracting

Kabo/Nasr Manufacturing and Manufacturing Al-Ahram beverages

Manufacturing and services Manufacturing and services Other

Other

Other Other

Other

Other

Other Other

1997

1997

1997

1997 1997

1997

1997

1997 1997

1997

Manufacturing and services

1997

Public offer Public offer

Public offer

Private sale

97.20 106.00

92.60

52.00

28.00 39.70

26.60

10.02

Unknown Unknown

Domestic appliance

Electro-cables

Duty-free monopoly Unknown

Unknown

Unknown

Chemicals

Manufacturing

Manufacturing

`

AND

Public offer Private sale

Public offer

Public offer

105.80

68.00

Joint venture Public offer/GDRs

58.00

Public offer

PRIVATISATION PEACE' BY PARTNER ALLIES 109

Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services Manufacturing and services

1998

1998

1998

1998

Beheira Rice Mills

Dakahleya Rice Mills

1998

Erection and Industries Services-Ariscom Alexandria Rice Mills

1998

1998

1998

Energy

1998

Gharbeya Rice MillsSouth Mill Cairo Silk Manufacturing Misr Aluminium

Services

1997

General Upper Egypt, Arab Rep. Contracting Misr Petroleum Processing Company Sharkeya Rice Mills

Sector

Year

Continued

Company name

Table 2.3

Min./tranches in stock market Assets sold/ liquidated Employee shareholder association Employee shareholder association Employee shareholder association

Employee shareholder association Employee shareholder association Assets sold/liquidated

IPO

Public offer

Deal type

15.94

14.76

10.33

1.51

104.70

19.00

Proceeds

Rice mills

Rice mills

Rice mills

Metal construction

Aluminium

Manufacturing

Rice mills

Rice mills

Petroleum

Contracting

Real sector

110 US ECONOMIC AID IN EGYPT

Other

Other

Primary

Services Services

Services

1998

1998

1998

1998 1998

1998

Services Services

Services

1998 1998

1998

1998

Manufacturing and services Other

1998

Assets sold/liquidated Majority sold on stock market Majority sold on stock market Anchor investor Min./tranches in stock market Direct sale

Employee shareholder association Employee shareholder association Employee shareholder association Employee shareholder association Assets sold/liquidated

79.00

43.68 65.87

42.50

26.27

12.69

7.67

7.67

16.82

Hotel

Food industry Contracting

Contracting

Contracting Food industry

Mining

Agency

Agency

Agency

Rice mills

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Kaha Preserve Food Mokhtar Ibrahim Contracting San Stefano Hotel

Domiat and Belkas Rice Mills-North mil Amoun Shipping Agencies Abu Simbel/Tiba Ship. Agency Memphis Shipping Agencies General For Mineral Wealth Prefab Houses Egy.Food IndustriesBisco Misr Al Nasr Civil Works

PRIVATISATION PEACE' BY PARTNER ALLIES 111

Infrastructure

Infrastructure

Infrastructure

Infrastructure

Financial

1998

1998

1998

1998

1999

1999

1999

1999

Egypt, Arab Rep. Mobile Telephone Services Company (EMTSC) Egypt, Arab Republic For Marine Supplies United Arab stevedoring Egyp. Maritime works-Martrans Cairo Barclays Bank

Gianaclis Beverages

Beni Suef Cement

Alexandria Portland Cement

Manufacturing and services Manufacturing and services Manufacturing and services

Sector

Year

Continued

Company name

Table 2.3

Trade sale

Trade sale

Trade sale

Employee shareholder association Majority sold on stock market Employee shareholder association Trade sale

Public offer

Deal type

178.00

150.00

9.40

4.00

12.69

8.85

5.00

53.00

Proceeds

Manufacturing (Cement) Manufacturing (Cement)

Financial intermediation (Banking) Manufacturing

Maritime transport

Maritime transport

Maritime transport

Telecommunications

Real sector

112 US ECONOMIC AID IN EGYPT

1998

Rashid Rice Mills

Manufacturing and services Other Manufacturing and services Manufacturing and Services Employee shareholder association

Various methods Direct sale

Trade sale

10.04

100.63 17.13

414.50

Rice mills

Manufacturing (Cement) Other Manufacturing

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Source: data extracted from Private Participation in Infrastructure (PPI) database, the World Bank.

1999 1994

1999

Assiout Cement Company Other El Nasr Boilers

PRIVATISATION PEACE' BY PARTNER ALLIES 113

Competitive Competitive Competitive Competitive Infrastructure

2000 2000 2001 2001 2001

2001 2004 2005 2005 2005

Egypt, Arab Rep.ian Gypsum Banque Du Caire Eastern Tobacco National Fertilizer Company Suez Cement

Primary Financial Competitive Competitive Competitive

Competitive Competitive Competitive Competitive Competitive Competitive

2000 2000 2000 2000 2000 2000

Alexandria Confectionary Ameriyah Cement Assiut Cement Bisco Misr Cairo Oil and Soap Co. Egypt, Arab Rep.ian Engineering and Equipment Plastic and Electric Industry Ramsis Agriculture Abou Zaabal Fertilizer Arab for Carpets Sharm El Sheikh Airport

Sector

Year

Stock Exchange sale Public offer 54.2 per cent stake purchase

Divestiture

Divestiture Divestiture Divestiture Divestiture Concession

Divestiture Divestiture Divestiture Divestiture Divestiture Divestiture

Deal type

Privatised companies in Egypt, 2000– 8 (US$ million)

Company name

Table 2.4

Full

Full Full Full Full Build, rehabilitate, operate and transfer Full

Full Partial Partial Partial Full Full

Deal subtype

22.00 52.45 116.60 340.80 338.90

25.41 43.51 47.40 13.00 125.00

7.57 142.43 49.46 24.05 8.92 7.00

Proceeds

114 US ECONOMIC AID IN EGYPT

Sidi Abdel Rahman Hotel and Land Suez Steel Company Alexandria Commercial and Maritime Bank

Competitive Competitive Financial

2006 2006

Competitive Competitive Competitive

2006 2006 2006

2006

Competitive Competitive Competitive

Infrastructure Infrastructure

2005 2005

2006 2006 2006

Financial

2005

Partial (82.1 per cent) Partial (50 per cent)

Full

Partial (10 per cent) Partial (90 per cent) Partial (8 per cent)

Partial (9 per cent) Full Partial (70 per cent)

20 per cent divestment

Full

20 per cent divestment

Partial

47.60 26.00

173.10

39.80 115.40 14.14

2.90 3.28 21.00

110.00 892.00

41.50

152.59 23.00

155.88

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Joint venture Joint venture

Joint venture Divestiture Joint Venture/ Public offering Asset Sale

IPO and private placement Joint venture Divestiture Divestiture

Public offer and private placement Public offer 69 per cent stake purchase

AND

East Delta Flour Mills Kafr Bahout Rice mill Misr Shbeen El Kom Spinning & Weaving Nasr City Housing Omar Effendi Pachin

Energy Financial

2005 2005

Sidi Kreir Petrochemicals Egyptian Commercial Bank Misr American International Bank MobiNil Telecom Egypt

Energy

2005

Alexandria Mineral Oils

PRIVATISATION 115

2006 2007 2007 2007 2007 2007 2007 2007 2007 2007

Primary Competitive Competitive Competitive Competitive Competitive Competitive Competitive Financial Financial

Infrastructure

2006

Sadat Gypsum Factory Alexandria Shipyards Helwan Refractory Nadler confectionary factory Nile Company for Matches Rowad Misr for Hotels Semiramis Verta Paper Heliopolis Housing Talaat Mustafa holdingMisr Insurance

Financial Financial Financial Financial Financial Infrastructure

2006 2006 2006 2006 2006 2006

Bank of Alexandria Cairo Far East Bank CIB Delta International Bank Egyptian American Bank Etisalat Misr (third GSM license) Vodafone Egypt

Sector

Year

Continued

Company name

Table 2.4

Joint venturepublic offering Divestiture Law 203 Local investor Law 203 Stock market Joint venture Joint venture Local investor Stock market Joint venture

Divestiture Joint venture Joint venture Joint venture Joint venture Greenfield

Deal type (80 (39 (19 (19 (34

per per per per per

cent) cent) cent) cent) cent)

Full Full Full Full Partial Partial Partial Full Partial Partial

(.7 per cent) (4 per cent)

(22 per cent) (48 per cent) (29 per cent)

Partial (3 per cent)

Partial Partial Partial Partial Partial

Deal subtype

6.60 12.76 17.40 2.60 1.20 51.70 48.28 6.55 9.14 160.70

142.24

1,610.00 35.00 2,224.70 50.50 169.80 2,900.00

Proceeds

116 US ECONOMIC AID IN EGYPT

Competitive Competitive Competitive

Competitive Competitive Competitive

2008 2008

2008

2008

2008

2008

2008

2008

2008

2008

2008

Extracted Oils

North Cairo flour mills

Upper Egypt flour mills

Misr Oil and soap

Middle and West Delta flour mills Middle Egypt flour mill

South Cairo flour mill

Alwatex

Partial (20 per cent)

Partial (9 per cent)

Partial (6.8 per cent)

Partial (9 per cent)

Partial (19 per cent)

Partial (9 per cent)

Partial (16 per cent)

Partial (17 per cent)

Partial (68 per cent)

Full Full

Partial (3 per cent)

2.19

2.21

4.49

5.59

7.47

9.22

16.16

23.00

52.98

138.75 83.98

8.87

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Competitive

Competitive

Stake in joint venture Stake in joint venture Law 203 minority stake Stake in joint venture Stake in joint venture Stake in joint venture Law 203 minority stake Law 203 minority stake Stake in joint venture

Stake in joint venture Law 203 company Law 203 asset

AND

Competitive

Competitive

Competitive

Financial

2008

Egyptian Saudi Finance Bank Alexandria Sodium Carbonate Steel Rebars Factory Al Ahleya Metallurgical Ismailia Misr Poultry

PRIVATISATION 117

Financial Competitive

Competitive Competitive

2008

2008

2008

2008

2008

2008 2008

2008

Misr Cooling

Misr Sinai for Diving Clubs General Silos

Nile for River Transport Gravena

MobiNil

Stake in joint venture Stake in joint venture Stake in joint venture Stake in Joint venture Stake in joint venture Law 203 minority stake Law 203 company Stake in joint venture Divestiture

Deal type

Source: data extracted from Private Participation in Infrastructure (PPI) database, the World Bank.

Infrastructure

Competitive Competitive

Competitive

Financial

2008

TMG Touristic investment - NBE Talaat Mustafa Holding - NBE Mirage Hotels

Sector

Year

Continued

Company name

Table 2.4

Full Partial (7 per cent)

Partial (9 per cent)

Partial (42 per cent)

Partial (80 per cent)

Partial (9 per cent)

Partial (2 per cent)

Partial (10 per cent)

Deal subtype

286.00

6.18 2.17

9.15

9.91

11.06

11.50

71.57

163.94

Proceeds

118 US ECONOMIC AID IN EGYPT

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privatisations. There, too, institutional procedures did not entirely impede arbitrary decision making. After Abu Zeid objected to some proposals for privatisation, he was simply excluded from meetings with decision makers in the Ministry. ‘In my two year term, I met one-on-one with the Minister zero times’, he said. He also asserted that all of his reports were stacked, unread, by the Minister.102 For all intents and purposes, the Ministry of Investments seems to have existed only to endow the appearance of transparency and institutional progress as it executed an agenda that was determined elsewhere, far from institutional controls or oversight. The Ministry’s actual work was not to debate or help set the agenda. Abu Zeid’s experience above is one illustration of a pre-existing trend, initiated at the start of privatisation in Egypt. This particular example provides insight into how the process of privatisation was used by the Mubarak regime to redirect the role of the State for the benefit of a specific type of elite while simultaneously aligning Egypt within the hegemonically-determined framework for the global division of production, organisation and specialisation. This reality differs from neoliberal assumptions regarding market ‘rationality’ and efficiency. The reality displayed inter-institutional confusion and corruption, thus blurring boundaries, responsibilities and accountability.103 Critics of privatisation in Egypt cited the lack of democratic accountability and oversight that are necessary to guard against corruption. Part of the responsibility, they argued, lay with the aid donors who impose conditions – such as selling and reducing the size of the public sector – without ensuring that there is transparency and honesty in the transactions. Instead, IFIs and aid donors directly intervene by supporting particular candidates who they believe will execute US-supported policies, as happened with the appointment of the MOI, Mahmoud Mohyeddin, and the Minister of Finance, Youssef Boutros Ghali. According to al-Naggar, both were chosen by the World Bank and the IMF; Ghali had previously worked at the IMF and was a former Minister of International Cooperation while Mohyeddin had held a post at the Central Bank of Egypt – two institutions that deal directly with foreign aid and lending.104 The financial flows reveal an infrastructural problem related to the re-organisation of control over the State’s revenue streams in favour of private owners. Privatisation effectively structured the process by which revenues from production

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US ECONOMIC AID IN EGYPT

and/or regime-sanctioned sweetheart deals could be managed and redirected. The legal private framework of globalisation and economic reforms, therefore, coincided with, and fortified, dominant economic and strategic goals in the region. Privatisation had yet to prove another neoliberal claim: that underperformance and corruption are caused by public ownership. In order to change existing worldviews, the public sector was turned from a symbol of development for the nation to a burden on the nation – even though the reasons for unloading the sector are not necessarily inherent to it. According to opponents, the task ought to be to reform the public sector so that it can become a symbol of national will and pride. This national framing implied that privatisation ought to be used for and evaluated based on its utility as a tool in achieving national (read, socially-comprehensive) economic goals, not as a goal per se. Critics’ estimations of national capabilities were not unrealistic, given the demonstrated ability of Egyptians to invest in, reform and restructure public enterprises prior to sale. According to al-Naggar, these examples obviate the rationale for ‘more efficient’ private owners.105 The primacy that the Gramscian IR model accords to cultivated and mutually beneficial relationships between an international elite and some among the domestic elite is critical to explaining how Egyptian institutions were transformed (from without and within) and how the State’s role was re-oriented to align with the US-dominant system. The assumption of a top-down imposition of the hegemonic model, however, was modified somewhat in Egypt. While international institutions and aid-granting states could establish the general framework for reforms by attaching conditions to aid, it was the home (autocratic) paradigm that held the executive decisions, establishing the parameters of foreign investments and determining when, where and how reforms, on the one hand, and wealth management/extraction, on the other, would be implemented. According to Dina Shehata, Senior Researcher at AlAhram Center for Political and Strategic Studies, it was the Nazif government that took the initiative to approach the United States for help with its free market reforms. The domestic elite, according to her, was ‘internally hegemonised’, meaning that they were already, by virtue of education, self-interest or conviction, intellectually incorporated into, and that they behaviourally adhered to, the dominant neoliberal (ideological) vision for development.106

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The US-endorsed Ahmed Nazif appointed five prominent business leaders to his cabinet: the ministers of Industry and Trade, Agriculture, Transportation, Housing and Tourism. US approval of the business- and market-friendly composition and direction of the Nazif government entailed the targeting of benefits to a few regime-connected business magnates.107 Because the ruling elite had the most immediate access to and knowledge of the true value of enterprises, they could take advantage of underpriced assets scheduled for privatisation. Moreover, the sustainability of dominant ideological economic claims about the benefits of privatization hinged on the extent to which some positive outcomes may extend throughout society. Not only were the material results questionable, most positive effects were, by design, limited and channelled to private interests. Despite the shortcomings in execution, critical discourses held nuanced stances vis-a`-vis privatisation. It was not rejected categorically: Both Gad and al-Naggar agreed that the private sector is neither the most efficient nor is the State sector the worst.108 In fact, the effects of privatisation were still inconsistent, viewed as potentially beneficial but only in certain areas and under as-of-yet nonexistent political and structural conditions (for example, public oversight and accountability). While both the government and its critics framed their arguments from within a nationalist perspective, there were pivotal differences in their basic views about the proper role of government in the economy. They also differed in their evaluations of the merits, respective contributions and purpose of foreign as opposed to domestic participation in economic activity. The globalising, free market and peace-normalisation framework of the regime contrasted with the historically more statist approach that sought self-sustaining and independent development. Unifying themes underlay much of the latter’s critiques of privatisation, reforms and normalisation: (1) their effect on Egypt’s capacity to independently set its economic path; (2) their comparative impact on Egyptian economic (and other) power relative to trade partners and (3) the perception that the main conflict confronting Egypt in the age of globalisation and ‘peace’ was economic.109 In contrast, for the regime (and for the US and other aid donors), national progress was much more dependent on further integration into the global free market system. Dominant discourse normatively assigned a greater value to foreign investments in national development. While oppositional economists as

122

US ECONOMIC AID IN EGYPT

well as labour and public employees were not categorically opposed to free trade, they were more critical of the terms of trade that were imposed on Egypt, sometimes critical of the destination (Israel) for trade and cognizant of the asymmetrical benefits to trading partners (including Israel). Furthermore, they highlighted the positive role of Egyptians in reforming their own institutions, the importance of statist development to assure domestic ownership over national assets and productivities and the need for more employment. In sum, assessments of the effects of aidrelated reforms were made through the main prism of contribution to (or detraction from) Egyptian independence. Insistence on a traditional, more statist, independent and nationalist economic framing was meant as a shield against the subordination of social and national goals to private interests – effectively, the denationalisation of development.110 This framing differs from the globalisation narrative that the US started advocating in the 1990s which relies on targeted assistance to the private sector to link the interests of some businessmen therein with those of the US (and Israel).111 The statist nationalist frame is understandable given the instances of suspicious privatisation deals as well as general perceptions of Egypt’s growing dependency (for example, on wheat imports) and subordination (for example, that the US subsidises its farmers but stipulates that Egypt cut agricultural subsidies). The statist nationalist narrative found inspiration in the identities and conceptions of society that were forged during the eras that preceded Camp David (and American dominance) and which were not completely eliminated by decades of aid.

The economic connection with military aid: the backbone of the process of privatising ‘peace’ Economic aid and advice regarding privatisation are integrally tied to military aid whose main purpose is ‘sustaining the peace’. Military aid is the most explicit manifestation of peace. Military aid aligned and benefited the extensive Egyptian military-industrial-economic complex by linking it with its dominant American counterpart – opening private routes of enrichment to the military sector. It eliminated the strongest strategic threat to Israel by removing Egypt from the ‘confrontation front’ (khatt al-muwajaha), re-orienting the Egyptian military away from its previous ethos of defending against foreign enemies, especially Israel.

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123

It ensured expedited passage for US ships through the Suez Canal. And, when needed, such as in the Iraq wars and in Afghanistan, it positioned Egyptian participation as a local gloss for American interventions in the Arab and Muslim world.112 For these reasons, as a leaked cable from the American Ambassador to Egypt Margaret Scobey stated, military assistance is considered ‘untouchable compensation’ by the United States to maintain peace with Israel.113 The Egyptian military’s relationship with Israel extended beyond merely maintaining the peace. There was active cooperation on military objectives that were of prime relevance to Israel and the US: namely, counteracting Iran. Jeremy M. Sharp, writing for the Congressional Research Service, reported on one example: In July 2009, an Israeli Dolphin-class submarine and SAAR V-Class warships passed through the Suez Canal on their way to conduct military exercises in the Red Sea, presumably as a signal to Iran. According to one source, Israeli maneuvers began in midJune and involved a drill in the Red Sea by the nuclear submarine Leviathan. Egyptian officials publicly stated that they had granted the Israeli vessels permission to pass through the Canal. According to one unnamed Israeli official, ‘This is preparation that should be taken seriously. Israel is investing time in preparing itself for the complexity of an attack on Iran. These maneuvers are a message to Iran that Israel will follow up on its threats.’114 Moreover, other forms of military cooperation were required to dispense aid: the Egyptian military had to play a part in protecting the security of Israel. For example, one WikiLeaks cable reveals the mechanics of when and why a portion of military aid withheld and/or released: Section 690 of P.L. 110-161, the Consolidated Appropriations Act, 2008, withholds the obligation of $100 million in Foreign Military Financing for Egypt until the Secretary of State certifies, among other things, that Egypt has taken concrete steps to ‘detect and destroy the smuggling network and tunnels that lead from Egypt to Gaza [. . .] Since 2004, there have been six other attempts in Congress to cut or reallocate US economic or military aid to Egypt; only one was enacted. On February 15, 2007, Congress

124

US ECONOMIC AID IN EGYPT

passed H. J. Res 20, the FY2007 Revised Continuing Appropriations Resolution (P.L. 110-5) [. . .] ‘The United States, which occasionally is thrust into the middle of disputes between Israel and Egypt, has attempted to broker a solution to the smuggling problem which is amenable to all parties. In the fall of 2007, a Department of Defense delegation toured the Gaza-Egypt border, and the US Army Corps of Engineers drafted a geological assessment of the underground smuggling tunnels. As a result, the US government has offered to allocate $23 million of Egypt’s annual Foreign Military Financing (FMF) toward the procurement of more advanced detection equipment, such as censors and remote-controlled robotic devices. It is uncertain when this new equipment will be purchased and delivered.115 Thus, aid played a role in incentivising the Egyptian military to police the border with the Gaza Strip. Military aid also produced economic benefits (for the US and for Egyptian middlemen). A significant portion of aid monies must be spent on the purchase of American military goods and services.116 The logic of peace as the route towards market democracy was an exploitable discourse for the military-based Mubarak regime and the US. Military aid helped to create and grow exclusive economic spaces for the Egyptian military.117 The US is well aware of this military-corporate reward system that operates in Egypt – in fact it commends it. The US Foreign Military Studies Office stated: The Egyptian military seems to have accepted its declining role in the political process. It has turned its attention to modernizing the Egyptian military and other matters of interest such as its economic activities which seem to have effectively offset its diminished political role. Senior military officers removed from the cabinet or government bureaucracy have usually been able to establish parallel domiciles in the military sectors. Likewise, upon retirement, many senior officers find important niches in the military-related commercial sectors.118 Aid gave the institution of the military financial and budgetary independence. It therefore helped remove the possibility of popular

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oversight. It simultaneously opened possibilities for the expansion of military economic activities (which benefit from free indentured labour in the form of conscripts). Mutually beneficial arrangements created dependencies among partnered and aligned elites on the relationships with the US. Sustaining common corporate interests is enhanced by the use of privatisation. One main tie between the military establishment and privatisation is the fact that Mubarak established a pattern of rewarding/ retaining the loyalty of successive heads of the Republican Guards (Qa’id al-Haras al-Jumhuri) with governorships in southern Sinai after their tenures of service were completed.119 From that position, they assisted in the sweetheart deals to develop state land, sometimes through private boxes and frequently in cooperation with business magnates.120 Another tie between the military establishment and privatisation is the fact that the head of the Republican Guards was appointed Deputy Minister of Investment to Minister Mohyeddin in the Nazif government. That military inclusion ensured that the chief security apparatus in the State had a say in the choice, price, sale and so forth of targeted enterprises.121 In this way, parts of the Egyptian economy and of state resources were diverted away from the public sector and even from the official free market to become part of the military’s economic empire – effectively privatised in all but name. As such, privatisation paradoxically enhanced the power and economic wealth of the military industrial complex. Privatisation also connected political and military interests with business interests via the latter’s dependence on military contacts and via military-business-government rotation in corporate, ministerial and party (NDP) posts. Perpetuating the aid relationship was necessary for the maintenance of economic and military relationships. According to Rif‘at Sayyed Ahmed, researcher, journalist and founder of the Yafa Center for Strategic Studies, the Washington-allied Egyptian elite ‘revolve around aid’, as consultants, researchers, experts and in rights and civilian institutions. In R.S. Ahmed’s estimation, the political effects of aid are much more devastating than the economic ones.122 In the United States, the Sunlight Foundation tabulated the incidents and purposes of lobbying by three large Washington DC firms on behalf of Egypt.123 Overwhelmingly, Egyptian military personnel accompanied lobbyists to meetings with lawmakers and Pentagon officials. The majority of visits

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US ECONOMIC AID IN EGYPT

focused on the continuation of military and economic aid, most of which is recycled back into American corporations. What is not recycled is spent either on the particular projects or on Egyptian military intermediaries, who have semi-private sinecures and fiefdoms in Egypt’s military industrial and economic production complex. For example, aid money pays for General Dynamic’s Abrams tanks which are assembled in Cairo; Boeing’s sales of CH-47 Chinook helicopters; Lockheed Martin’s sales of F-16s and Sikorsky Aircraft’s sales of Black Hawks.124 The relationship is further strengthened via training courses in the United States for thousands of Egyptian military men.125 Thus, both sides benefit from aid money. Reshaping the Egyptian military and integrating it within the American domain was boosted by other international forms of aid. For instance, aid donors and IFIs, such as the IMF, stipulate that the public sector be reduced. This discourse was seized upon by the Mubarak regime to reward the armed forces by transferring ownership away from the public and awarding loyal retiring military officers with very lucrative sinecures. These businesses and interests were conveniently ‘decentralised’ away from the State and exempted from paying taxes.126 The (off-market) privatisation that was facilitated by military aid on the one hand, and economic aid on the other, are self-reinforcing. The push to reduce subsidies and the public sector enhanced the economic interests of the Egyptian military establishment. Specifically, the state budget was restructured, giving the impression that the public sector has been successfully reduced. The new accounting owed much to the fact that privatisation enabled transfer and development of state assets and land for the military, effectively privatising state subsidy streams.127 As a result, the military and the SOE holding companies now had their own budgets, separate from the general budget. Presumably the separation would improve efficiency and reduce the infringement of political calculations on military and economic decisions at these enterprises. While these restructurings were in compliance with the dominant free market agenda, they were unconstitutional and removed parliamentary oversight over the budgets of these enterprises. As a result, subsidies were granted without oversight, thereby increasing inter-governmental debt. Subsidies sometimes took the form of ‘emergency funding’ and were approved by the prime minister’s and finance minister’s offices without institutional or citizen oversight.

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127

Meanwhile, these subsidies also helped (globalising) sectors and businesses, like the oil producers, within the State.128 This redistribution of ownership was official (and beyond public reach). The new budget expense categories: (1) hid military and security dominance over a wider range of government expenditures and (2) obfuscated proper economic and social analyses of the budget. Paradoxically, as privatisation expanded, so did subsidies. The share of subsidies in the national budget exploded partly because it was a means for the regime to disguise benefits and to redirect revenues. Support for energy, fuel and electricity significantly supersedes that of direct subsidies for basic necessities to the poor. In 2009, Egypt spent US$ 8.4 billion on subsidies, with 70 per cent (US$ 5.89 billion) going to energy.129 According to el-Beblawi, by 2011, subsidies constituted 20 per cent of the fiscal budget, with the subsidy for the petrochemical sector representing 70 per cent of the total.130 Such intentional admixture of extraneous subsidies helps heavy industries, the bottom line of multinational corporations and joint ventures with the US military industrial complex. Military factories, regime-connected businessmen and multinationals that own cement and steel factories consume 55 per cent of all petrol subsidies, 75 per cent of natural gas subsidies and 61 per cent of subsidies of electricity.131 These percentages thus reveal a reverse subsidisation: from the poor to the rich. Moreover, in 1997 the ‘Atef ‘Ebeid government amended the Investments Law to grant investors (including cronies and foreign companies) indemnity (hasana) from legal prosecution and investigation by any administrative or judicial oversight or authority for possible (monopoly) pricing while they are receiving state subsidies.132 These inducements made Egypt an attractive destination for foreign investments, integrating Egypt further into the global economy. Contrariwise, they meant that ordinary Egyptians paid the price by subsidising foreign profits and did not have recourse to attain compensatory damages. Parts of the subsidy went to fund the intentional loss making in state owned enterprises so that there would be even more reason to privatise them. According to prominent economist and anti-corruption activist, former member of the National Council for Human Rights (Al-Majlis al-Qawmi li-Huquq al-Insan) and member of the Kifaya movement, noted economist ‘Abd el-Khalek Farouk, the IMF promoted this type of subsidy, considering it a part of the necessary ‘restructuring’ and ‘re-organising’ in preparation for

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US ECONOMIC AID IN EGYPT

sales.133 Meanwhile, 85 per cent of all taxes collected derived from the poor (whose taxes partially pay for the subsidies).134 Other indirect forms of subsidisation to multinationals and investors are tax and customs breaks – estimated at LE 260 billion in 2007.135 These monies are lost revenue for most Egyptians. Concomitantly, the regime seized on the pretext of ‘excessively large subsidies’ in order to reduce welfare expenditures, leading to rationalisations that the poor are a ‘drain’ and must ‘tighten their belts’. Disguised subsidies negatively affected some governmental institutions that had few international ties but which are integral to Egyptian industrial development. For example, privatised contracts to export natural gas meant that the Ministry of Electricity did not receive enough fuel to ensure sustainable and reliable generation of electricity.136 Yet the overall subsidies category misleadingly implied that the State continues to support the needy through rising social expenditures. ‘Abd el-Khalek Farouk argued that ‘structural corruption’ pervades the system. He defined structural corruption as institutional, paradigmatic, organised and codified. A series of 19 specific laws plus a plethora of decisions by boards of directors, public organisations and so forth protect and disguise corruption by penetrating the legislative structures that regulate economic and financial life within the State.137 According to Farouk and his colleagues at the Nile Center for Strategic and Economic Research, these corrupted structures grant extra-legal powers to the expert specialised authority – be it a minister, manager of an agency or bureau or president – to make exceptional decisions. This ability is an illegal meshing of legislative with executive power,138 a built-in exceptionalism. Such accounting and structural reorganisations ‘proved’ that Egypt had successfully reduced its public sector. Less obvious, however, is that now ‘private’ or semi-private military enterprises were publically subsidised, for example, receiving subsidised fuel, electricity and water inputs. The redistribution was hidden by (dominant) legal and standard accounting procedures. In this example, economic reforms functioned to hide structural redistribution of wealth and revenue for the purpose of sustaining private and hegemonically incorporated pockets. In addition, the United States’ project of promoting decentralisation as well as privatisation reinforced the military’s interest in expanding its economic footprint as opposed to focusing on its military priorities. According to ‘Imad Gad and al-Naggar, Egypt spends relatively very

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little on its military compared to other states in the Middle East, especially compared to Israel.139 Military expenditure as a percentage of GDP in Arab states in 2010 ranged between 6.1 per cent in Jordan to 11.2 per cent in Saudi Arabia; Egypt spent 3.34 per cent of GDP in 2002, which then fell to 2 per cent in 2010; in comparison, Israel spent 8.49 per cent of GDP in 1995, falling to 6.46 per cent in 2010.140 As a result, the military is forced to provide for itself in order to accommodate the sizable number of people in the armed forces and to secure their interests in an era of forced state austerity. The above practices are theoretically aberrant forms of privatisation and are counter-productive to the dominant discourse of market democracy that emphasises competition, governance, transparency and accountability. Even if the goals of market democracy efforts had been sincere in terms of promoting Egyptian progress and growth, the one-size-fits-all approach did not account for local variations. A crucial variation was that in a ‘democratising’ and ‘reforming’ but still autocratic environment, the assumptions of oversight, accountability and so forth are hostage to power holders. The speed of reforms after the appointment of Prime Minister Nazif confirms what some of the literature on privatisation argues: namely, that autocratic forms of government implement reforms more efficiently.141 But quantity did not necessarily mean quality. In execution, there was wide scope for corruption. What transpired was often the expropriation of productive assets and public wealth by private interests often in association with foreign partners. Leaked WikiLeaks documents provide evidence of these types of arrangements. For example, the US pressured Egypt to privatise particular firms by including them within the ‘benchmarks’ that needed to be met for aid dispensation – among which were ‘cash cows’ (for the Egyptian treasury), such as petrochemical firms. In addition, the US interceded with members of the regime on behalf of Israel to integrate Israeli organisations within boycotting (even non-Egyptian) organisations – for example, addressing membership for the Magen David Adom (ADA) society in the International Red Crescent. Furthermore, the United States used its position as an aid donor to pressure the regime to make economically dubious decisions that directly benefit American corporations. For example, the US and Qatar interceded on behalf of General Electric and Electromotive Diesel (both US companies) to sell a total of 80 trains to Egypt, which beat the much lower-priced Chinese

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bid. Meanwhile, the 2005 Mutual of Understanding Agreement with the Nazif government stipulated that Egypt divest the ‘strongest bank operating in Egypt’ – whose privatisation would incidentally ‘increase Bank of America’s assets’.142 These practices of complicit expropriation of productive assets by the partnered elite served the essential strategic purpose of aligning a regional power with the dominant US interests. Lacking democratic oversight, the only checks in Egypt came from labour activism, a vigilant press, oppositional political parties and public activists. Leaked WikiLeaks cables from the American Embassy in Cairo reveal US awareness that ‘nationalist’ opposition strongly objected to normalisation of relations with Israel and to Egyptian subordination to the US.143 Moreover, US embassy staff acknowledged that popular refusal to normalise constrained the regime – for example, in the natural gas treaty. In one cable, the ‘political concerns’ of the Mubarak regime prolonged the negotiations until the natural gas deal was signed and, more importantly, these ‘political concerns’ were circumvented only by the creation of a private sector company to intermediate the sale.144 Similarly, the lack of a systematic approach by the regime in dealing with labour disputes as a result of privatisation did not deter embassy staff from giving a positive evaluation to the strategy of Investment Minister Mohyeldin. A WikiLeaks US Embassy Cable from Cairo provided a glowing report of Mohyeldin’s and Nazif’s privatisation agenda, including approbation that ‘[l]abor and debt issues would be dealt with on a case-by-case basis’.145 These objections produced US frustration with the ‘nationalist’ opposition and labour for their (misguided) resistance to privatisation, which was impeding the Mubarak regime’s ability to proceed speedily with economic reforms and privatisation. One leaked WikiLeaks US Embassy Cable from Cairo, after lauding the Nazif government’s privatisation achievements, went on to note: Since the first few months of 2006, opposition to the privatisation programme has increased in the local media, as papers representing trends across the political spectrum have begun to accuse the Minister of Investment of ‘selling Egypt’. Criticism of a lack of transparency on planned sales, asset valuations, and the status of negotiations has also become more pronounced.146

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It continued that: Al-Araby newspaper, the mouthpiece of the nationalist, statist Nasserist Party, for instance, on September 25 complained that the GoE had opened the door for increased dominance by international capitalist enterprises over key industries. Aziz Siddiqi, Egypt’s prime minister from 1972–1973 – the period during which the ‘public enterprises’ were first created – similarly expressed dismay. MOI [Minister of Investment] responded to the criticism by insisting that profitable sales are not only important for the companies’ future viability but are also economically justifiable in the near term. The overriding concern for MOI, whether in the petrochemical industry or elsewhere, remains labour opposition’.147 After noting the heightened public resentment of and opposition to Prime Minister Nazif’s and Mohyeddin accelerated privatisations, one embassy cable characterised negative oppositional views as a perceptual problem: ‘Such an inter-ministerial group for reviewing privatisation plans existed under earlier administrations but fell into disuse under Nazif, which helped create the public impression that the MOI acted alone in deciding on privatisations.’148 Unmentioned in the cable was that the possibility that the degree of corruption superseded in scope and severity what would have been checked by some level of formalised accountability. Obstacles to public consent over these policies emerged from their autocratic implementation as well as from the reality that the predominant economic push for privatisation needed to produce positive results that reach that masses and are not mostly limited to the immediate beneficiaries of that privatisation. Other military and economic effects from the use of privatisation in Egypt were transformist in general. The military (non-market type of) privatisation promoted the growth of allegiance pay and clientelism. It structurally coopted institutions through accounting secrecy, bonuses and so forth. It also redistributed benefits asymmetrically in favour of targeted state institutions.149 Critics perceived military aid as intended to ‘strengthen the backbone of the security apparatus in confronting any popular mobilization’.150 Suspicions of privatisation were compounded by the linkage between US aid and the ‘settlement’ process (‘amaliyyat al-salam). Critics of the

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regime referred to that process in derogatory terms, shortening the phrase to ‘the operation’ (el-‘amaliyya) and substituting terms so that it became ‘the international con job’ (‘amaliyyat al-nasb al-dawli).151 Within that discourse, aid is a fac ade that beautifies unconditional support for Israel. According to Jeremy Sharp’s 2009 Congressional Report, such support was evident in Mubarak’s visit to Washington in August of that same year.152 He was accompanied by his entire cabinet, including Intelligence Chief Omar Suleiman, and by his son, Gamal Mubarak. The presidents discussed how to jump-start the moribund Israeli – Palestinian peace process. In an interview following his trip, Mubarak stated that ‘Some Arab countries that exchanged representatives and trade offices might think of reopening these offices if Israel committed itself to stop settlement expansion and to resume final-status peace negotiations.153 Furthermore, Mubarak cooperated in imposing the blockade on Gaza, and in working towards Palestinian reconciliation by engaging Hamas leaders. Towards these last two endeavours, Mubarak sought the opinion of ‘various American Jewish and Egyptian – American groups and representatives’.154 As a prelude to the visit, ‘Egyptian security forces uncovered and arrested a terrorist cell which allegedly had been planning to assassinate Israel’s Ambassador to Cairo Shalom Cohen’.155 In general, the visit was another instance of highly personalised diplomacy, conducted between power elites at the highest levels and away from public scrutiny. In the oppositional framework, the result of these arrangements meant that any popular mobilisation that resisted the logic of warm peace or of alignment with US policies would have to face an aid-addicted and supplied apparatus before it ever confronted the muscular hegemonic force behind it. Transformism via partnered elites re-oriented geostrategic policies and captured resources. Critics charged that the political and strategic decisions by the regime to rely on aid-driven development detracted from Egyptian sovereignty. By diverting profits (and decision making regarding future exploitation, development and direction), the path of aid fortified the autocratic power holders while simultaneously subordinating Egypt and its economic development.156

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The aid relationship impacted political and strategic choices by the regime to cooperate in what critics called the ‘Americanization of the Egyptian economy’.157 This effect was manifest in the following target for early privatisation.

The early privatisation of Al-Marajil Al-Bukhariyya: linkage with a strategic goal According to the widely-circulated Al-Ahram al-Iqtisadi, Al-Nasr Boilers (Al-Marajil) is a symbol for the corruption associated with privatisation.158 It deserves special attention because of the implications that its privatisation and dissolution had for the regional military and strategic balance of power. Al-Marajil was established in 1962 as a cornerstone of national industry and as part of Egypt’s nuclear programme. Located on prime real estate in Giza, it manufactured military equipment for the navy and the army, pressurised containers, iron forgers and equipment for the steel, concrete, petrochemicals and brick industries. It also produced equipment for electrical plants that could be used in nuclear energy production. Al-Marajil was ahead of its competitors in the region and exported its products regionally. Al-Marajil was the first company to be offered for sale in September of 1992, under the conditions set out by the IMF and by the United States.159 American and Western investment consultancies assisted in the valuation.160 Like the majority of sales of the public sector, it was sold during the government of Prime Minister ‘Atef ‘Ebeid. Due to revelations by whistleblowers, researchers at independent think tanks, resistant labour, legal activism and vigilant media outlets, the deal became a national scandal. Al-Marajil was profitable up until Law 203 was passed in 1991. Afterwards, its administration took several steps to prepare for its privatisation, all of which led to subsequent losses. It was transferred to a holding company that initiated a re-organisation that was not funded by the National Investment Bank. The restructuring cost became accumulated (uncollateralised) debt, doubled the company’s financial budgetary expenses and increased the interest service payments on preexisting debt. Despite protests from its workers and a successful lawsuit by labour that temporarily halted its sale, al-Marajil was re-offered for

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sale in July 1993. The board of directors of the holding company decided to form a negotiating committee with Bechtel Consulting (February 1994) and three foreign companies submitting bids – Ansaldo (Italian), Babcock-Wilcox (Canadian – American) and ASEA Brown Boveri (multinational, headquartered in Switzerland). The committee’s recommendations were approved by the Minister of Enterprise. Even though the CEO was convicted of corruption, the conviction did not stop the sale on 13 February 1994.161 The new foreign owner, BabcockWilcox Egypt, spun-off several of its subsidiaries (electric production facilities), collecting multiples of the original price paid for the parent company. Babcock-Wilcox then simply stopped all of al-Marajil’s production in Egypt and sold it to an Egyptian businessman who, in turn, demolished the original plant and sold the land to a real estate firm that he also owned in 2005.162 As happened with many privatisation deals of SOEs, holding companies quickly separated the productive assets from the real estate because the quick profits were in the real estate. Likewise, at al-Marajil the new owner split the original company into a real estate interest and an industrial interest (which was now bankrupted). Subsequently, the now worthless industrial part was merged with Egyptian– American Nassef Sawiris’ National Company for Iron Industries, while the real estate part was merged with the international multinational (and US military contractor) owned by his Egyptian– American brother, Samih Sawiris, Orascom Development Holding. Both are affiliated with Orascom Construction Industries, a multinational corporation (and military contractor) founded by Naguib Sawiris, with offices in 33 countries, including McLean, VA in the US.163 Revelations of corruption did not always originate in the institutions of (supposed) oversight. For example, the corruption in the Marajil deal – intentional loss-making to justify a low price of US$ 17.3 million (Table 2.3) – only came to light when its CEO, ‘Abd-el-Wahab al-Habbak, was experiencing marital problems with his second (secret) wife. In divorce proceedings, she exposed that he had received a US$ 91 million payoff, which he had registered in the names of his first wife and children. Threatening to expose ‘those who are above me’, he admitted corruption in return for a ten-year sentence, much of which was served in his home.164 At the time, al-Marajil was only one of three such giant boiler factories that could be used for nuclear energy facilities in the developing

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world. It was sold at a fraction (LE 57 million) of what the land it sat on cost (LE 350 million), let alone the factory. Even though the regime could have repossessed al-Marajil due to the proven corruption, it (tellingly) chose not to do so. It was eventually repossessed by order of the court after Mubarak was overthrown in December 2012.165 The process of privatising al-Marajil exposes the limits of hegemonic incorporation. Privatisation was the only means by which the dissolution of al-Marajil could have been accomplished because it enabled the supersession and disaggregation of opposing organised forces.166 Opposition from labour and from economists was motivated not just by the consequences of privatisation in terms of unemployment, but also by how the deal affected Egypt’s position vis-a`-vis Israel.167 The anti-normalisation theme added geostrategic dimensions to what the Mubarak regime had framed as strictly business (contractual). What was now legally private – and circumscribed – could not remain confined therein. Due to the Israeli factor in the background, economic and private transactions became public and strategic. The public perceived reasons beyond the ostensibly economic and business decisions to privatise a particular enterprise or sector in order to meet dominant stipulations. The geostrategic context in which the dissolution of al-Marajil took place produced social and political challenges that extended well beyond the material economic dimension. The possibility that Israel would benefit from the dismantling of alMarajil was a factor that heightened labour’s opposition to its sale. One opponent was Kamal Khalil, much-imprisoned and -tortured leader of what he calls ‘the nationalist labour movement’ (al-haraka al-‘ummaliyya al-wataniyya) and the head of the Labour and Peasant Movement Party at the time of writing. Khalil participated in and led protests, civil disobedience and strikes against normalisation of relations with Israel. Labour groups also filed lawsuits against the sale of Al-Marajil and other normalisation business deals. For instance, labour joined in the lawsuit filed by Ambassador Ibrahim Yusri challenging the constitutionality of the gas treaty with Israel.168 According to Khalil, the rank and file of the unions and syndicates were mostly against normalisation. In contrast, opposition to normalisation was not reflected by official leaders who were appointed by the regime. Often, union bosses like Hussein Meghawir were viewed as ‘representing state security in the workers movement’.169 Khalil stated that normalisation

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and following the American agenda was carried out by ‘subjugated politicians’ (al-sasa al-ma’mourin). In contrast, labour rank and file activists supported the Palestinian Intifada, led aid caravans to Gaza and were against the American war in Iraq. While there is no direct proof that the privatisation of al-Marajil was motivated by a US need to protect Israel and a regime need to demonstrate the quality of their allied partnership, there is no denying the manner in which it was perceived by opponents to the deal. It thus assumed a predominant place in discourses opposing aid and normalised relations with Israel. The case of al-Marajil presents the corrupting potential of privatisation as experienced in Egypt. Equally important, from an oppositional standpoint, is that it directly speaks to the US interest in containing Egypt’s military and development capacities vis-a`-vis the only nuclear power in the region, Israel. It links the US interest in warm peace with its use of aid to promote a particular type of privatisation that can serve dominant economic and strategic interests. Even though US aid was not directly connected to this particular deal, al-Naggar affirmed that the provision of aid opened political and business back doors and pushed it through.170 El-Beblawi concurred even though he was not ideologically opposed to the idea of a peace economy in the region.171 If anything, oppositional framing and objections to the deal showed that the benchmarks were not only economic, but also ideological (and anti-normalisation).

Who bears the costs? Negative evaluations of some effects from aid and privatisation An externality in neoclassical welfare economics refers to costs or outcomes that are not socially optimal, whereby a cost is suffered involuntarily by a party that did not choose to incur it. For example, pollution is an example of a negative externality that might often result from the processes of industrial production. Analogously, aid to Egypt also produced costs that were borne by a society that had no input into accepting or declining the terms attached. Because the projects, associations and effects of US aid were sometimes less beneficial than official public proclamations, contradictions with official rationalisations became fodder for opposition.

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Objections to the effects of the conditions attached to aid were made by both regime insider figures and by prominent public figures I interviewed.172 Mustafa Al-Fiqi, General Secretary of the Advisory Council for Foreign Affairs, member of the NDP and Mubarak’s personal secretary between 1985 and 1992, among other posts, said that even within the government there were criticisms to the ‘non-investment of Egypt’s strategic position in its relations with the US’.173 Nevertheless, Gad stated that there could be ‘no debate with the Pharaoh over aid; you are not asked to think, just to implement’.174 Both noted that aid is not given altruistically. Rather, donors have an agenda to control political and economic decision making in the developing world, especially in pivotal countries such as Egypt. Aid, according to Gad, was used in ‘transparent blackmail’ (muhawalat ibtizaz makshufa), singling out its undeclared stipulation/side-effect of low Egyptian military expenditures ‘at the behest of Israel’ so that Egypt had one of the lowest military expenditures in the world.175 While Gad argued that privatisation could be good or bad, depending on the quality of the people in charge of its execution, he believed that the US did not care so long as Egypt toed the line. The manner in which privatisation proceeded in Egypt increased the power of a few businessmen who emerged in the 1970s with the Infitah policies. To critics, the allegiances of these mega-capitalists are suspect due to their ‘repetition of the peace tune’, which is in line with Western policies. These businessmen rely on the foreign partner in their businesses and projects in Egypt to protect them from ‘arbitrary actions by power’ (‘asf al-sulta bihim) when they commit transgressions and illegal activities.176 Moreover, critics objected to the focus of pro-normalisation businessmen on profitability regardless of society’s needs.177 R.S. Ahmed called it infitah al-sadah madah, literally, ‘the Infitah of anything goes and is commended’ or helter-skelter.178 For example, the linkage between normalising capitalists and executive power resulted in the appointment of a well-known symbol of corruption, steel magnate and monopolist Ahmed ‘Ezz as Chair of the Parliamentary Committee for the NDP and Chair of the Planning and Budgetary Committee in the lower House of Parliament. From that position, he and the committee could counteract and intimidate any potential challenges from the judicial arm of government. In one instance, ‘Ezz helped craft the anti-monopoly law, which practically

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ensured that monopolists maintain their monopolies until the prime minister deems that they are ‘acting’ monopolistically – that is to say, it is not empirically based on their share of the market.179 ‘Ezz then used his privatised company in a QIZ zone to supply Israel with the products it needed to build the Separation Wall. Profits of the cement and steel publicly traded (privatised, monopoly) companies experienced sharp increases that coincided with the building of the Separation Barrier in Israel and the Occupied Territories.180 For some critics, there is a fundamental difference between running a company and running a state, between investing for development versus investing for profit. Many emphasised the adverse effects of economic ties with Israel on the Egyptian economy and on its regional standing. Because most of the aid money went to stimulate developed economies through contracts and supplies from Western companies, many critics, such as Farouk and R.S. Ahmed, charged that the real aim of aid is the humiliation and abasement (izlal) of Egypt.181 While some like R.S. Ahmed, Gad and al-Naggar rejected the link on moral and intellectual grounds and wanted to end forms of normalisation with Israel, all had materially pragmatic reasons as well. For them, peace is not only a theme; it has material and sociological realities in addition to political ones. In the economic oppositional discourse, peace comes with aid-prescribed neoliberal recipes that, despite neoliberal orthodoxy, contain caveats for Israel. These caveats enable and then maintain Israel’s superiority vis-a`-vis Egypt. Specifically, some Egyptian economist critics noted an ideological double standard in neoliberal aid prescriptions for reducing the economic role of government. In contrast, the United States does not specify how Israel is to spend the (larger) amount of aid that it receives. They add that no one in the global system objects to the fact that the share of government expenditures as a per cent of GDP in Israel is much greater than in Egypt. According to the World Bank Development Indicators, Egyptian public expenditures ranged between 26 per cent and 27 per cent from 1990 to 2004, and around 33 per cent thereafter – significantly less than the 45 per cent range for Israel.182 Similarly, public expenditures in many European nations also exceed those of Egypt, being from high in the 30 per cent to the middle of the 50 per cent range.183 From that standpoint, the fact that these pressures for reduced government expenditures are exerted on Egypt by

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the United States and the IMF – which is perceived as acting on its behalf – is hence ‘irrational’ and ideological.184 Moreover, Egypt barely spent any money on research and development, thereby contradicting in practice the promise that globalisation will offer opportunities to acquire technological know-how via foreign participation in the development process. As can be seen in statistics compiled by the Central Agency for Public Mobilization and Statistics, (Tables 2.5 and 2.6), the transfer of technologies – engineering and electronics – increased from the US to Egypt by a far greater amount, in total revenues and relatively. Between 2000 and 2009, Egypt spent on average 0.23 per cent of its GDP on research and development (R & D). In 2009, it fell to 0.21 per cent. By contrast, Israel consistently spends among the highest on R & D in the world: 4.27 per cent in 2009.185 At the very general level, the aid-enabled strategy of reducing the State’s role in the economy is only valid up to a point. Internationally, all forms of US aid are themselves a form of intervention by a state – that is, the US government grants the aid. In turn, the US receives extensive cooperation from and relies upon Egyptian governmental institutions and ministries, to ‘reform’, ‘restructure’, ‘develop’ and so forth. Yes, growing the private sector and privatising social wealth were encouraged in Egypt. Yet the role of the State was significantly enlarged in the sense that key individuals at the apex could use the weight of the institutions to push through privately- or externally-tailored reforms. Partners from within the State were key to structuring the environment through which privatised and denationalised economic integration into the international sphere would occur. In the area of natural gas, for example, aid’s drive for normalisation resulted in complicit and predatory development of Egyptian resources. The beneficiaries were Egyptian regime insiders and well-connected businesspeople, as well as Israel. The Mubarak regime used a business front, Eastern Mediterranean Gas (EMG), to hide the (normalising) State so as to obscure normalisation of trade relations with Israel from a (rejectionist) public. Regime insiders and businessmen viewed normalisation as the gateway to further foreign investments. Conveniently, ‘expert’ advice recommended that Egypt export as much gas as possible before local demands rise. This consensual (expropriating) arrangement between autocrats and private sector tycoons alongside Israeli and other capitalists demonstrates domination by proxy.

18 3 11 19

22 1 5 28

23 10 4 93

38 38 854 224 0 0 1,457 2 366 2

2003

23 10 5 367

41 34 1,027 13 0 1 1,338 3 781 3

2004

25 12 10 117

39 39 4,069 56 0 1 811 3 357 2

2005

32 29 3 105

64 28 4,651 119 0 1 773 2 1,030 2

2006

34 22 5 145

63 35 3,999 84 0 1 726 3 138 4

2007

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (data treated and classified by EITP).

26 18 191 107 0 1 1,000 2 351 1

16 9 131 114 0 12 953 1 73 2

Agriculture Foodstuffs Fuel Chemicals Leathers Books and papers Spinning cotton and textiles Ceramic products Metals Engineering and electronics industries Furniture Marble and granite Glass Other

2002

2001

Egypt: exports to USA from 2001 to 2010 by commodity sectors (LE million)

Sector

Table 2.5

45 40 28 84

129 128 3,424 617 0 5 2,328 4 117 29

2008

38 25 22 69

129 181 2,864 489 0 33 3,997 2 81 13

2009

57 24 26 77

211 258 1,751 925 0 79 6,017 2 125 29

2010

61 0 10 136

65 0 9 153

61 0 22 266

3,738 796 97 1,040 1 60 18 5 224 1,279

2003

77 0 24 176

4,069 357 311 1,300 0 86 32 4 413 1,539

2004

76 12 185

21 256

4,412 744 31 811 1 146 46 6 973 1,774

2006

73

4,389 722 455 1,350 1 157 67 3 671 2,081

2005

10 196

153

7,635 1,126 519 1,277 1 276 33 5 893 2,395

2007

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (data treated and classified by EITP).

3,669 762 44 1,014 0 54 20 3 232 1,605

3,423 773 4 820 1 68 17 3 308 1,652

Agriculture Foodstuffs Fuel Chemicals Leathers Books and papers Spinning cotton and textiles Ceramic products Metals Engineering and electronics industries Furniture Marble and granite Glass Other

2002

2001

Egypt: imports from USA from 2001 to 2010 by commodity sectors (LE million)

Sector

Table 2.6

244 1 30 924

8,051 1,699 1,048 3,173 12 608 368 31 7207 7,535

2008

216 1 24 698

6,204 1,728 1,204 3,533 15 548 212 84 3624 8,297

2009

270 1 15 860

8,297 2,178 1,287 3,689 28 529 381 12 5123 5,436

2010

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Evidence from a US Embassy in Cairo WikiLeaks Cable supports the above: In an effort to distance itself from the political implications, the GoE encouraged the formation in 2000 of the Egyptian Eastern Mediterranean Gas joint venture company, owned by Israeli businessman Yossi Mieman’s Merhav Group (25%), Egyptian businessman Hussein Salem (65%), and the GoE’s Egyptian Gas Holding Company (10%). Having a private company negotiate with the Israel Electric Corporation made the arrangement more palatable for the GoE [. . .]186 The GoE is eager to bring these projects online quickly because Egypt needs (a) hard currency in order to compensate for the losses from declining exports of crude oil; (b) to create employment; and (c) to convince multinationals to keep investing in Egypt’s emerging gas industry [. . .] Some Egyptian gas experts argue investors should export as much gas as possible now because Egypt’s domestic gas demand is expected to rise rapidly, dampening exports.187 The State played the leading role in selective, elite-benefitting preparations for the ‘free market’. Those extended beyond laying the institutional and legal frameworks. The State sponsored and funded restructuring reforms in state-owned enterprises (SOEs) targeted for privatisation. The State also rescued the private sector banks in order to solve the problem of bad debt.188 According to many in the opposition, the privatisation of the banking sector had strategic consequences. It created an economics of dependence and the transfer of foreign currency and funds to foreign bank headquarters (for corporate reasons or to avoid paying Egyptian taxes), and reduced commitment to fund national projects.189 Moreover, another professed economic success story – that the private sector would power national growth – had questionable national consequences. On the (ideologically-dominant positive) side, since the Peace Treaty in 1979, the share of the private sector in industrial production increased from 25 per cent to close to 70 per cent by 2010. In order to finance the shift, banks and the National Investment Bank (Bank al-Istithmar alQawmi al-Misri) increased their loans to the private sector so that they

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accounted for 60 per cent of the total. The ratio is higher (75 per cent) when financing via family enterprises is added. However, the destination of the loans indicates that the industrial sector received less than 20 per cent and most loans went to finance tourism, trade, finance and services. Meanwhile, loans to public sector enterprises were cut off, partially contributing to their deteriorating condition and performance while at the same time preparing them for sale at base prices to the elite in government and in administration. Significantly, since Infitah policies were launched in 1974, the industrial sector centred on assembly not creative indigenous production. The result is that between 40 per cent and 60 per cent of all industrial needs were imported. Businesses involved in assembling components that were manufactured internationally naturally had links with the international system. Therefore, they were positioned as potential entry points for economic normalisation as well as the free market ideology and associated reforms.190 Once again, from the perspective of oppositional discourse, the dominant influences on state economic policies had a complicit executor in the Mubarak regime. The reduction in the public sector was supposed to open the doors to the private (international and domestic) sector to lead in the development process. Economist critics objected to both the premise and to its execution. The discourse emphasised the uncaring and short-term slipshod thinking of government policies that aimed to attract foreign investors. Objectors contended that the excessive tax breaks that were granted ignore the fact that the basis for real growth in any economy must rely on the State’s own people. More often than not, domestically driven strong growth is its own attraction for international investments, not the other way round. In addition, contrary to neoliberal claims about the need to reduce dependence on the State – thereby justifying cuts in social welfare expenditures – critics asserted that state subsidies had merely been redistributed. Specifically, subsidies accounted for 5.1 per cent of GDP in the 2009 –10 budget (a fall from 9.3 per cent in the previous fiscal year). Direct transfers to the poor in the form of social security were only LE 1.4 billion, making the share of each individual in a poor family of four only LE 25 a month/or US$ 4.5. In contrast, subsidies for exporters were LE 4.12 billion, which translated into an average of US$ 1 million per exporter.191 In addition, while the military and stock trading profits were exempted from taxation under the Nazif government, the neoliberal recommendation of a flat tax was implemented in Egypt.

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The New Income Tax Law (91/2005) introduced a flat tax of 20 per cent, replacing the previous 42 per cent tax on high income earners and shifting the tax burden onto the middle class.192 Finally, inflation of between 8 per cent to more than 16 per cent was an extra burden on those who lived on fixed incomes and/or were non-asset holders – in other words, most of the population (see Table 2.1). Specific new laws added to the redistribution of wealth. Legal activist organisations, such as Awlad al-Ard, challenged the government’s new labour (2002 Unified Labor Law) and social security laws that stripped the working class of the rights it had won through historical struggle. Privatisation was cited as a direct cause.193 The new law prohibited the use of the words ‘worker’ or ‘trade union’ in the name of any political party, leading to challenges from labour activists such as Kamal ‘Abbas, head of the Center of Trade Unions and Workers Services (CTUWS). ‘Abbas filed lawsuits and led a struggle to change this designation of what a political party can and cannot be. In addition, in battling the law, he sought to extend unionisation to the private sector, arguing that there were hardly any real enterprises left that were still public.194 The sale of SOEs resulted in the early retirement of 280,000 workers, thereby increasing demands on social security funds.195 The claim of private sector industrialisation rang hollow for labour activists such as Kamal Khalil and Kamal ‘Abbas because there was no societal programme of instituting an educational basis for it, nor programmes for re-educating laid-off workers and, worse, all imported technologies and factories came with imported experts so that there was no transfer of knowledge. The total absence of such policies contrasted sharply with the Nasserite era.196 Advisor to the Arab Investment Fund (a subsidiary of the IMF), el-Beblawi, agreed that there was no industrial strategy by the regime [. . .] The economic policies, if one can call them that, went through three stages under Mubarak: the first ten years were a mess (lakhbata), the second decade was picking up the pieces (lamlama), and the last decade was stealing (sariqa). El-Beblawi attributed most of the corruption to Gamal Mubarak and his cohort of businesspeople. According to him, aid ‘made it easier for the government to not fight corruption’.197

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There were also more immediate financial losses from the free market push to invest social security and national insurance funds in the market. In line with American financial advice, Minister of Finance Youssef Boutros Ghali invested social security funds in the market. The push led former Minister of Social Affairs and Securities (Wazirat al-Shu’oun al-Ijtima‘iyya wa al-Ta’minat) Mervat al-Tellawi, to tender her resignation in protest.198 Nevertheless, ‘Atef ‘Ebeid’s government gave control over the national insurance funds to the Finance Ministry. The segment that was invested experienced severe losses before the experiment was halted.199 Thus, from the perspective of activist labour organisations, it was the government’s own policies that were to blame for the economic disasters and bad conditions in the country. They not only objected to the continuation of these policies, but they also resented labour bearing the burdens of its ill-effects while investors and capitalists received new laws that granted them even more privileges and tax breaks. Another prominent effect from the aid relationship that is central to oppositional discourse in Egypt is the unbalanced trade, including the dependence on wheat imports, which critics view as exacerbated by aid. According to the Office of the United States Trade Representative, Egypt is the ninth largest agricultural export market for the US, largely due to the Commodity Assistance Program. Egypt is one of the few countries with which the US enjoys a consistent trade surplus (Table 2.7), which opposition economists attribute to the unbalanced trade relationship that aid structured. Table 2.7 shows that the US surplus with Egypt almost doubled between 1994 and 2010. US exports to Egypt more than doubled from 1994 to reach US$ 6.8 billion in 2010. Imports also increased, but only to US$ 2.2 billion by 2010.200 Table 2.7

US goods trade with Egypt (US$ billion) 1980 1985 1990 1994 2000 2008 2009 2010 2011

Balance Exports Imports

1.4 1.9 0.5

2.2 2.3 0.1

1.9 2.2 0.4

2.3 2.9 0.5

2.4 3.3 0.9

3.6 6.0 2.4

3.2 5.3 2.1

4.6 6.8 2.2

4.1 6.2 2.1

Source: Office of the United States Trade Representative. Available at http://www. ustr.gov/countries-regions/europe-middle-east/middle-east/north-africa/egypt (accessed 1 June 2013).

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Table 2.8 Year Total Total Total Total Total Total Total Total Total Total Total Total Total

1991 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

US trade in goods with Egypt (nominal US$ million) Exports

Imports

Balance

2,720.50 2,985.10 3,334.10 3,564.50 2,868.60 2,606.70 3,077.80 3,159.30 4,029.00 5,259.30 6,002.20 5,253.10 6,835.10

205.80 606.30 887.80 882.30 1,355.90 1,143.00 1,283.80 2,091.20 2,395.80 2,376.70 2,370.40 2,057.70 2,238.20

2,514.70 2,378.80 2,446.30 2,682.20 1,512.70 1,463.70 1,793.90 1,068.00 1,633.20 2,882.60 3,631.80 3,195.40 4,596.90

Source: US Census Bureau. Available at http://www.census.gov/foreign-trade/balance/ c7290.html#1995 (accessed 1 February 2014).

As can be seen in Table 2.8, US exports to Egypt had been declining slightly from 1991 to 2003, as was the total balance of trade (US trade surplus) up until 2005. That changed after the appointment of Nazif. Exports to Egypt started rising again to almost double what they had been in 2003, while imports from Egypt held steady. According to the Central Agency for Public Mobilization and Statistics (Tables 2.5 and 2.6), the top export to the US was textiles, followed by fuel. Textile exports increased by six times between 2001 and 2010, while fuel increased by more than 13 times. The third largest export in proceeds was (petro-) chemicals. Imports from the US vastly exceeded exports. Imports were led by agriculture. The value of agricultural imports increased about two and a half times over that time period. Therefore, critical Egyptian economists viewed the commodity assistance (Table 2.6) as a means by which the US subsidises its farmers. Moreover, they saw it as an opportunity to position Egypt, the largest importer of wheat in the world,201 as a market for its (underpriced and subsidised) exports, thereby directly hurting Egyptian wheat production. The agricultural sector witnessed early cooperation and trade with Israel.202 Thanks to US aid and its method/tool of privatisation, a

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complicated network of mutual interests that are hard to dismantle was created, fortified by formal trade agreements and by joint scientific research, of which USAID is a prime funder and facilitator.203 The domestic push to normalise was spearheaded by former Agriculture Minister Youssef Wali. In a letter to Parliament in June 2001, Wali asserted that agricultural normalisation with Israel was beneficial for Egypt since it enabled technological acquisition, scientific cooperation, irrigation know-how, improved varieties of fruits and vegetables and so forth.204 Critical pieces in the major newspapers and in the media in general showed that agricultural normalisation was perceived as producing particularly egregious results. Reflecting on the comparative benefits to Egypt versus the Israeli partners, many pieces espoused the theme that the prime beneficiaries were the ‘enemy’ and that this was intentional to subordinate Egypt (despite the peace).205 More importantly, some deals concluded by Wali, such as (carcinogenic) fertilisers and geneticallymodified seed, were literally deadly because they used internationallybanned carcinogenic hormones, fertilisers and pesticides.206 Various books and articles in oppositional political party media as well as in major newspapers laid the blame at the feet of the Mubarak regime, which did not see fit to inspect, oversee or prevent the normalising imports. For them, the privatised aspects of normalisation, conducted under the paradigmatic structures of US dominance and/or aid, represented a hidden war on ordinary Egyptians in which client capitalists were the allies of the opposing side.207

Conclusion This chapter has demonstrated how privatisation-normalisation built socio-economic bridges with and through elites, thereby circumventing popular opposition. It was through partnered elite that US aid most efficiently constructed symbiotic relationships around coinciding interests. Positions at the apex of state institutions were leveraged to create entities that could now trade and consume previously nationalised, public and strategic resources and assets, benefitting those who had the will to effect and to gain from subordination (taba‘iyya). Aid allowed the US to play a mediating role, when necessary, to foster, structure and facilitate Egyptian–Israeli relations which were, in general, normatively objectionable.

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Paradoxically, the structuring of globally convenient, uniform and consistent governance and transparency standards created more opportunities for recasting corrupt practices under new ‘legal’ guises. Standard prescriptions, such as decentralisation, sometimes resulted in less institutional oversight and accountability and less specialised and popular input (if these opposed the official agenda). Counterproductively, the drive for reforms, including governance and accountability, was more intensively focused on areas of international trade, investments and contract-enforcement and protection (of private property). The privatised spaces and productivities were less likely to experience oversight due to the intentional reduction in the State’s social and administrative roles. What would have been (democratically legislated and monitored) reforms in the democratic and ‘democracylite’ states instead segmented institutions through piecemeal reform interventions, which created spaces for expropriations in an autocratic environment. This strategy was necessary, being the most effective route to hit the benchmark that would keep aid flowing: a comprehensive peace that would normalise Israel. Negative economic effects of aid privatisation contradicted dominant claims but nevertheless managed to attain strategic goals. The intentional conflation between reform and compliance produced transformismo-type changes in the political, strategic and economic roles of the State. The dominant discourse recalibrated the indicators of ‘progress’ and ‘development’ from a societal national frame to a globalised and privatised frame (where normalisation was the pass key). Thus, the reform game was conducted with an eye to strategic calculations, and privatisation was sometimes a form of extraction and less of reform. In Egypt, the regime and affiliated privatisation leaders and reformers instituted reforms that were technically in line with or even exceeded aid and loan donor stipulations, but were essentially an extension of the autocracy and corruption of the ruling elite. These outcomes fall short of the assumptions of good governance and transparency that would endow legitimacy on the actual practices that underlie democracy and free markets. Prioritising US strategic interests meant that the purported ideological commitments to democracy and genuine reform were sometimes only rhetorical pretexts intended to advantage Israel and attain normalisation. Therefore, the

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prevailing assumption that the United States was seeking to expand legal, governance and economic norms were suspect in application in Egypt. Meanwhile, the prioritisation of strategic goals meant that, economically, the direction, type and scope of Egyptian development was predetermined and circumscribed.

CHAPTER 3

`

QUALIFIED INDUSTRIAL ZONES AND NATURAL GAS: REMAPPING THE ECONOMY FOR WARM PEACE'

The domains of Qualified Industrial Zones (QIZ) and natural gas were heavily impacted by the macro-processes that restructured the Egyptian economy, rendering it conducive to the creation of private avenues that would benefit from alignment with American interests, especially in normalising Israel’s relations with the Arab world. Transformations in these domains were narratively justified by a reconceptualisation that integrated globalisation within the concepts of ‘nation’ and ‘economy’. In the name of national progress, US-aid and the Mubarak regime sought to construct a globalising economy that (autocratically) incorporated normalised relations with Israel. In this reconfiguration, the internationalised elite who were part of or connected with the ruling power became the links that sustained continued reforms and developmental progress, serving as conduits for aid and/or as the leading force behind trade and business development. Undercutting this process, however, was the conspicuous insertion of the US and Israel in the redirection of the national economy, which provoked institutional, legal, economic and ideological resistances – even within the appropriated and/or newlycreated structures of the globalising-normalising economy. The United States orchestrated and was a signatory to the QIZ and the natural gas agreement(s), both of which became prominent themes in

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oppositional discourses. The strategy of relying on privatisation and allied partners was key to the achievement of these agreements. Despite the legal fac ade, the economic and national merits from these deals were contentious, tainted by questionable terms and official misconduct. The controversies marred perceptions of this geopolitically efficient method to re-orient state policies. Privatisation was used by the regime as a rationalisation to explain reform in accordance with US geostrategic vision. Economic reforms altered and re-represented the historical Nasserist national interest away from distributive benefits to the widest number possible and towards privately-owned interests, postulating that growth would trickle down. Reforms also produced greater control and exploitation of national resources for the benefit of power holders, effectively changing the role of government vis-a`-vis citizens and increasing reliance on regime-favoured elite (and their private companies). In the freewheeling, transitional, free market, privatising environment, specific economic arrangements, such as the QIZ agreement and the natural gas treaties, were signed and implemented by circumventing and transgressing constitutional stipulations for submission and debate before the legislature. Thus, transformist- and privatisation-focused reforms rendered the private route to peace at best superficial and at worst counterproductive in terms of convincing citizens with statist-nationalist convictions and nonbeneficiaries. The heavy reliance by the United States on the cooperation of the authoritarian ruling elite and the globalising private sector meant that US aid-induced reforms, contrary to dominant goals, did not decrease the political vulnerabilities that arose from normalisation. It was not most Egyptians, but the Egyptian regime (and its allies), that supported the warm peace.

The debate on relative power between states A central debate in international relations theories, whether neorealist, liberal institutionalist or Gramscian/critical, is explaining how international arrangements and institutions affect, sustain and alter relative power between states. The liberal and globalising vision for Egypt propounded by the United States has prominent geopolitical (not just economic) aims. Because Egypt is a pivotal strategic asset to dominant power relations,

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the US geopolitical goal of normalising Israel affected the economic project by tilting the benefits towards allied elite, sometimes in specific territorial spaces that are critical to the new economic arrangements. The cases in this chapter demonstrate the importance of the globalising private sector and allied partners in authoritative positions to the extension of dominant agendas, both economic and geostrategic. Specifically, the QIZ and natural gas agreements were the fruit of the economic restructuring that had encouraged symbiotic elite relationships to create and benefit from cross-cutting interests with the United States and, by extension, Israel. The transnational economic and political elite linkages that emerged were, by necessity, limited. Stability and dominance were mainly enforced through partnerships and privatising segments (territories, institutions) that circumvented popular input – not through pluralist consensual mechanisms.1 Privatisation was not pursued for purely economic reasons. Rather it had a political function in that it helped solve the problem of securing a warm peace. The cases of the QIZ and the natural gas agreements show that US geostrategic goals necessitated the use of mechanisms that allowed for the supersession of opposition. These mechanisms included regulatory interventions, business transactions, executive fiat and so forth – all of which excluded policy orientation and decision making from the purview of popular forces.2 In this endeavour, economic elites had an asymmetric advantage to influence government policies through new legal and economically ‘rational’ mechanisms that enable control via privatisation.3 Despite the relative power of these partner allies, the QIZ and natural gas treaties generated splits within the intellectual and institutional elite – on nationalist (versus globalising economics) grounds.4 Moreover, significant swaths of society remained ideologically and morally unconvinced, since many recognised the normalisation project hidden within the reformist agenda. Gramscian hegemony – in the sense of legitimation and consensual intellectual and moral incorporation of wide segments in society – failed to emerge in Mubarak’s Egypt for several reasons. Reliance on the ability of allied elite to leverage their power positions worked in advancing crosscutting interests, but the fruits of those efforts were often restricted to partners who stood to gain. The ‘reform’ process enhanced the power of the authoritarian elite, partly by opening new possibilities for personal

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enrichment, and partly because the dominant interest in a warm peace made the US and the regime ignore legal, institutional and social obstacles to the natural gas deals and the QIZ agreement. Therefore, the postulated ‘consensual mechanisms of social control’ were jettisoned when there was potential threat to a dominant strategic interest – for example, arising from the popular rejection of normalisation. The cases of the sale of natural gas and the QIZ agreement below illustrate the pitfalls that may arise when an economic liberalisation project proceeds regardless of a parallel political one. Negative economic and other outcomes undercut dominant promises of development and progress and provoked oppositional discourses that proposed economic nationalism (and its historical anti-normalisation path) as the compass that ought to guide globalised development. Moreover, the insertion of politico-strategic extraneous interests into the formula for development meant that critics of the ruling elite could resist the new direction with additional (discursive) weapons besides pointing out the negative economic effects.

Territorial incorporation of warm peace zones: the geopolitical benefits of private linkages As seen in the last chapter, the linkages between some pro-normalisation elites and executive power were solidified by political means through the appointments of retiring military persons and business magnates to lucrative or influential positions.5 A complementary, putatively legal, economic dimension to solidifying normalising linkages can be observed in the use of privatisation in QIZ and the natural gas agreement(s). The QIZ agreement, signed on 24 December 2004, was the most important agreement since Camp David in terms of Egyptian –Israeli cooperation. Egyptian Minister of Foreign Trade and Industry Rachid Mohamed Rachid told Newsweek that the QIZ agreement with Israel is a ‘huge thing’ that has helped change the mind-set in Egypt towards Israel, after 25 years of (regime-level) political peace.6 QIZ introduced a new stage on the path to normalisation, adding new mechanisms that integrated Egypt into the globalising ‘peace’ economy and also initiating a new level of US and Israeli control over what had been mostly a political peace.7 What Rachid failed to mention is that the treaty

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rendered QIZ businesses and territories dependent on the Israeli stamp of approval. Unlike a Free Trade Agreement (FTA), by which Egyptian exports would be subject to World Trade Organization (WTO) rules and thus would have guaranteed access to the United States, a QIZ treaty was more vulnerable because the Israeli partner had to sign off on the Israeli content of all products.8 The Natural Gas Treaty followed shortly thereafter in March 2005. Both agreements were concluded at the time when Mubarak wanted to hand over power to his son, Gamal. Critics read both as providing credentials to elicit US approval of the anticipated transition in rule. Both were viewed as cornerstones in the US relationship with the regime – now encompassing the ‘natural partners’ of Mubarak’s businessmen. Paradoxically but expectedly (given that anti-normalisation was a part of every syndicate and labour union platform, as well as of every non-ruling National Democratic Party (NDP) political party platform9), these agreements increased the political vulnerability of the regime. The political vulnerability was evident whenever events in the region relating to Palestine and Gaza worsened. For example, after the Israeli attack on Gaza in 2008 – 9, the provision of Israeli QIZ inputs to Egyptian firms was suspended. As a result, Egyptian firms were unable to meet their contracts with US importers.10 An FTA would not have been subject to these unstable political conditions because there are other international (and Egyptian) sources for inputs. Despite challenges in the courts and labour activism in many cases of privatisation of public enterprises, private interests prevailed, further heightening the risk of regime isolation and vulnerability. Presidential decrees ensured that both natural gas and QIZ ‘passed’ – without the constitutionally-mandated parliamentary approval.11 The regime initially claimed that they were annexes to the original peace agreement signed between the United States, Egypt and Israel. The actual text of the Natural Gas Treaty was never made public. However, leaked documents (below) exposed some of the terms. Similarly, the price at which gas was sold to Israel was considered a state secret by the Mubarak regime. Estimates of the losses incurred from under-pricing gas ranged between four to five billion dollars per year between 2002 and 2010.12 Moreover, despite challenges in the courts that declared the treaty unconstitutional, the regime offered an alternative rationalisation. It chose to hide the State behind a fac ade of a private company, EMG.

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It declared the subject off-limits because it was a contractual obligation between two private entities.13 Besides the Israeli state, the main beneficiaries from these arrangements were elite business people (Egyptian, Israeli, American or international – the last two categories may also include/disguise Israeli business14) and political insiders of the Mubarak regime. For instance, until 2008 EMG was majority owned (65 per cent) and headed by Hussein Salem, an Egyptian businessman strongly connected with Hosni and Gamal Mubarak and frequently described as Egypt’s ‘front man’ in Washington. The relationship was detailed in an ABC News report: [. . .] a federal probe into allegations that a firm transporting American arms to Egypt had embezzled millions of dollars under an exclusive Pentagon contract established following the historic Camp David peace agreement with Israel in 1978. ‘There were many, many weapons, and billions of dollars in armaments that needed to be shipped. It was an enormous job,’ says Ibrahim Oweiss, a Georgetown University professor and an economist who headed Egypt’s economic mission to the US at the time. Within three years of founding a company known as the Egyptian American Transport and Services Corporation, or EATSCO, an Egyptian businessman named Hussein Salem and his American partner were under federal investigation on charges they ripped off the US government by padding the shipping costs for the arms by $8 million. ‘Hussein was the fac ade for the Mubarak family’, said Oweiss, who met Salem around that time and knew of his ties to the Egyptian intelligence community and Mubarak’s brotherin-law, then a top Egyptian military procurement official. Salem pleaded guilty to the charges, and agreed to reimburse $3 million to the US government and pay a $40,000 fine, according to news reports. He went on to become one of Mubarak’s closest confidantes and a successful businessman with interests in Egypt’s natural gas industry as well as hotel and resort holdings, including the Sharm-el-Sheikh resort where Mubarak now lives full time [. . .] Wilson now says that operation was a ‘front’ for Egyptian intelligence, and that Mubarak was ‘deeply involved’ in setting up the operation and installing Hussein Salem as Egypt’s ‘front man’ in Washington. ‘This was all handled by Mubarak and the military

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attache´ in Washington’, says Wilson, who served 22 years in federal prison for charges that he sold arms to Libya and plotted to kill federal prosecutors.15 In the case of QIZ, some of the detrimental effects of aid-linkages with Israel can be seen in the choice of what to include within the QIZ framework versus what to exclude, in employment figures from QIZ zones and in trade exchange statistics. (See below.) Consequently, think tank publications such as Strategic Papers (al-Kurrasat alIstratijiyya) by Al-Ahram Center for Political and Strategic Research argued (from 2000) that these types of agreements, along with the whole American ‘Initiative for a New Middle East’, use the concept of partnership in order to change the map of the Arab world to suit US interests.16 The rest of the chapter will discuss how such a conclusion could be reached by critics. Privatisation worked, at the individual, institutional and territorial levels, to utilise state institutions and to constitute a private route for ‘peace’ so as to divert and re-orient Egyptian resources and productivity.

Economic ‘peace’: redirected benefits in QIZ QIZ provided the legal, political and economic frameworks for the geographic reconfiguration of modes of production in Egypt. Specific areas and the businesses residing therein were incorporated within the normalisation agenda of the US and Israel. The QIZ agreement followed a pre-existing main normalising trend in agriculture. The new Minister of Trade and Industry mentioned above, Rachid, was the first businessman and ‘reformer’ to hold a cabinet position in Egypt (as Minister of Investment and Trade in the Nazif government).17 Rachid was in charge of QIZ. Like Youssef Wali, the Minister of Agriculture and Land Reclamation from the ‘Ebeid government (1982– 2004) and Deputy Prime Minister and Deputy Chairman of the ruling NDP, Rachid was a well-known proponent of trade with the United States and of normalisation.18 The minister’s stance reflected that of another domestic force: textile magnates who were facing stiff economic winds due to the 2005 General Agreement on Tariffs and Trade (GATT) deadline for the implementation of reforms.

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Egypt had signed the GATT Agreement in 1995, which ended the quota system for trade. The agreement had granted a ten-year leeway, ending in 2005, for the implementation of institutional free-market reforms and for the preparation of firms for entry into the free market. Egyptian textile magnates were unsuccessful in meeting the challenge.19 Fearful about the loss of their market position and not having instituted the necessary reforms and modernisation procedures in their firms, a group of textile magnates in Egypt led the push to sign a QIZ agreement similar to the one signed in the Occupied Territories and in Jordan in 2000. The magnates believed that tax-free access to the US markets would alleviate pressures on their businesses. The Egyptian negotiating team included officials from the Ministry of Industry and Foreign Trade. Prominent proponents who were involved behind the scenes included Galal Zorba, president of the CIPE/USAID-supported Federation of Egyptian Industries (encountered in Chapter 1). Even though the original QIZ agreement between the US, Israel and the Occupied Territories had been designed to ‘enhance peace’, the Egyptian negotiators did not address the Palestinian issue. The Mubarak regime wanted to keep public opinion focused on an economic achievement that Egypt would (supposedly) derive from peace. Meanwhile, the identities of those involved in the negotiations reaffirmed that a politically safe type of normalisation is one that remained confined to relationships between business magnates. The treaty was another step towards alignment and normalisation. Significantly, an article in the treaty stipulated the creation of a joint Egyptian– Israeli committee to monitor its implementation. The committee would meet quarterly, alternating between Cairo and Jerusalem, with US participation as an ‘observer’. Thus, indirectly, the QIZ agreement was an Egyptian acceptance (by analogy) of Jerusalem as the capital of Israel.20 The internal impetus coincided with US interests. It was a route to circumvent strong labour rejection of normalisation.21 In response, the agreement satisfied a narrow group of beneficiaries. The preferential treatment of normalisation-friendly business people was evident in the purposeful exclusion of al-Mahalla al-Kubra from the QIZ agreement. AlMahalla is the largest industrial area for textile production and the largest employer of textile workers in the Middle East. It also has a relatively large number of small and middle-sized firms, as well as several public

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enterprises, all of which would be at a marginal disadvantage (post-QIZ) vis-a`-vis normalising businesses in the QIZ areas. Criticism in the press attributed al-Mahalla’s exclusion to a geostrategic reason: it posed a greater competitive threat to the fledgling Israeli textile partners. Pro-privatisation regime policies, they charged, led to the intentional neglect of the much larger publiclyowned textile enterprises, leading to unprecedented losses at huge SOEs like Misr Helwan li al-Ghazal wa al-Nasij.22 These enterprises had great socio-political and historical significance, since the Egyptian textile industry is three times as old as the state of Israel. The United States also refused to include within QIZ other areas where Egypt might enjoy marginal advantages, such as meat, poultry, agricultural products, furniture and leathers. In addition, the privileges that QIZ granted to (large) exporters to US markets were not of the type that would make Egyptian industry more internationally competitive.23 The trade patterns created by QIZ were questionable from a sustainable development perspective, being mainly geared towards the export of low-technology garments. The same was true of Egyptian exports to Israel (see Table 3.1). QIZ also worked against regional economic Arab integration by enhancing competition among QIZ competitors (for example, Egypt now competed with Jordan for export markets in the US). Finally, QIZ took advantage of the low industrial and labour costs in Egypt, stabilising their low levels and also lowering the wages of labour in other QIZ countries. According to the IMF, Egypt had the lowest cost of electricity, water, natural gas and building construction compared to major competitors Jordan and Turkey, among others.24 Critics like the Revolutionary Socialists accused the government of coddling the private, magnate-owned textile firms in the Free Zones.25 More importantly for these critics, US help, whether in aid or by QIZ facilities, resulted in Egypt becoming one of the few countries with which the US had a positive trade balance, thanks to American exports of grain and food commodities. A contrasting discourse can be seen at the QIZ Authority website. According to the QIZ Authority, the expected benefits to Egypt in the medium term included increased foreign direct investment and job opportunities. The Authority anticipated US$ 5 billion in foreign direct investment as a result of the QIZ Protocol and other agreements such as the EU Partnership Agreement, the Arab Free Trade Area and the

1 0 2 4

1 0 2 5

1 1 0 6

6 7 0 46 0 1 1 1 1 2

2003

1 1 0 3

21 15 1 18 0 0 2 1 1 1

2004

2 3 0 7

20 10 5 43 0 1 4 1 2 2

2005

5 2 1 9

14 12 11 51 0 1 2 0 6 0

2006

10 4 1 17

17 24 2 24 2 1 4 0 7 1

2007

8 12 1 15

19 65 3 103 0 1 39 0 9 1

2008

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (data are treated and classified by EITP).

9 9 157 20 0 1 2 0 1 0

6 6 700 23 1 2 1 0 4 5

Agriculture Foodstuffs Fuel Chemicals Leathers Books and papers Spinning cotton and textiles Ceramic products Metals Engineering and electronics industries Furniture Marble and granite Glass Other

2002

2001

Egypt exports to Israel, 2001– 10 by commodity sectors (LE million)

Sector

Table 3.1

16 6 1 23

19 81 1 89 1 1 94 3 4 1

2009

17 3 4 30

29 144 7 107 0 2 32 4 2 4

2010

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Common Market for East and South Africa (COMESA, which Egypt joined in 1998).26 The regime argued that investments would increase the economic growth rate and potentially add 300,000 new jobs in the following few years. Moreover, the QIZ Authority stated that threats to domestic inputs from compliance with the QIZ Protocol rules of origins were ‘not expected’, adding that even though imported inputs are, and have historically been, above 50 per cent in manufacturing and clothing, ‘Egyptian producers generally choose inputs that increase their products’ competitiveness, whether based on higher quality or lower cost’.27 The Ministry of Investments announced on its website that investors responded positively to the investment-friendly environment that was launched as part of the reforms programme in June 2004. It stated that the number of newly established companies had increased and that existing companies had expanded. Fully, half of all companies (more than 30,000) were established between 2004 and 2009. Six thousand existing companies expanded their operations during the same time frame. Furthermore, net Foreign Direct Investments (FDIs) reached ‘unprecedented’ levels (a cumulative US$ 42.4 billion over the same time period).28 According to the Ministry of Investments, the peak establishment of new companies and expansions of pre-existing ones in the Free Zones rose, especially following the appointment of the Nazif government and until 2008. However, by 2010, the total of new establishments and expansions had fallen precipitously to only 38.29 Significantly, even though the bulk of trade was in textiles and clothing, the QIZ agreement includes a special category for construction material, which facilitated the export of bricks, iron and cement to Israel. Due to their weight, the cost of importing these materials from Egypt was much cheaper than other alternatives. Needless to say, in the post-Nazif government exports of these items soared. Most went to build the ‘Separation Barrier’ and the ‘settlements’, among other things.30 Sixty per cent of the components of cement production, like natural gas and electricity, were subsidised by the State, leading to exceptional profits among the newly privatised (monopoly) cement producers.31 QIZ also granted Israel economic advantages in terms of access to the large Egyptian market. According to the Israeli Central Bureau of Statistics (Table 3.2), up until 2009, Israel exported more to Egypt than it imported, not counting oil. The overall trade between the

QUALIFIED INDUSTRIAL ZONES Table 3.2

Period 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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GAS

161

Israel – Egypt trade (US$ million)

Imports from Egypt, current prices

Exports to Egypt, current prices

Trade balance (for Egypt) – reverse imports and exports numbers for Israel

47.4 25 30.4 17.9 20.1 20.7 20 20.3 22.3 29 49.1 77.2 94.3 132.4 270.9 355.1

31.2 57.9 54.9 53.4 54.7 58.9 47.1 26.2 26.4 29.4 93.8 126.7 153.6 139 134.5 148

16.2 –32.9 –24.5 –35.5 –34.6 –38.2 –27.1 –5.9 –4.1 –0.4 –44.7 –49.5 –59.3 –6.6 136.4 207.1

Note: Trade balance calculated from import and export numbers. Numbers do not include oil and natural gas. Source: Israeli Central Bureau of Statistics, Imports and Exports are calculated for 1995–2010 from data by month and in US$.

two countries almost doubled in 2005, coinciding with the Nazif government and the implementation of QIZ (Tables 3.2 and 3.3). Finally, the size of Egypt’s trade deficit with Israel, which had been declining up until 2004, experienced a sharp reversal in 2005 (Table 3.2). Trade continued to grow sharply until the ousting of the Mubarak government. In 2009, the emergence of an Egyptian surplus was due to fewer imports in the wake of the economic slowdown after the world financial crisis and the collapse of the Cairo Stock Exchange. The official government report on foreign investments and free trade zones, the Annual Report by the General Authority for Investment (GAFI) (2008/9), states that among GAFI’s goals are: to encourage a

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Table 3.3

Trade since the QIZ Protocol, value (US$ million)

Year

QIZ Companies Exports Value under Protocol

QIZ Companies Imports Value to cover Israeli contents

2005 2006 2007 2008 2009

288.6 637.5 688.8 744.7 763.5

36.0 73.7 80.4 78.6 80.5

Note: exports growth rate from 2005 to 2009 is 164.4 per cent. Source: QIZ Unit, http://www.qizegypt.gov.eg/about_faq.aspx (accessed 1 February 2014).

‘partnership’ between the private and public sectors; to develop the legal and organisational structures that attract foreign investment and to further integrate Egypt into the globalisation paradigm.32 Therefore, GAFI’s activities complemented the privatisation work at the Ministry of Investments, headed by Mahmoud Mohyeddin.33 In 2009, GAFI signed four bilateral agreements to protect and encourage investment and six memoranda of understanding with international agencies for development. It also joined seven joint committees with other states to formulate the parameters of cooperation. Because part of GAFI’s role is to market assets for sale internationally, it boasted of relations with 808 foreign firms in its annual report. These efforts to fortify foreign involvement in Egyptian production are partially funded by the United Nations Development Program (UNDP). GAFI also works with other international organisations that specialise in improving investment climates: IFC, USAID, UNDP, UNIDO, COMESA, the World Association of Investment Promotion Agencies (WAIPA) and ANIMA Investment Network.34 The above activities align with American policy objectives for Egypt by producing territorial and institutional reorganisations of production and capital exchanges. They are thus tied to the decentralisation (of command over production) strategy that is part of globalisation. The GAFI report stated: In light of the Authority’s plan to provide facilities and incentives for investors and to grow investments, the idea emerged to establish branches for the Authority in all the governorates of

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Egypt, implementing the paradigm of decentralization by being close to where the investors are [. . .].35 These territorially-based types of reorganisation are dependent on privatisation and concomitant links with a consensually-complicit elite. In effect, GAFI is the intermediary institution that serves as a domestic and international access point for domestic and international private capital to grow the private sector economy. Better yet, in terms of globalisation, the new private growth would focus mainly on obtaining foreign funding and/or exporting to foreign destinations whatever is beyond the absorptive capacity of the domestic market. In short, territorial trade reorganisations structured global economic integration and dependence. These results are considered positive by GAFI. The annual report boasted that 87 per cent of Economic Free Zones were occupied and working in 2008/9. There were 1,160 projects worth US$ 7.4 billion capital investments, with an investment cost of US$ 14.1 billion. Investments offered 216,800 jobs, with salaries equal to US$ 219 million.36 The number of jobs offered did not reflect new work opportunities. The QIZ Authority did not break down the number of new workers who were added after the start of QIZ. Therefore, the total number reflects workers that were already employed at enterprises prior to their joining QIZ.37 It is important to put the value of exports from the Free Zones in perspective. According to the GAFI annual report 2008/9, the zones exported US$ 6.7 billion worth of goods and US$ 5.1 billion of services. They imported an almost equal amount (of goods) – US$ 6.6 billion. While the economic contribution to the national economy from the Free Zones grew to 6.6 per cent, it was still a small part of Egyptian GDP. Free Zone goods and services constituted 19.8 per cent of total Egyptian exports of goods, and a smaller portion of exported Egyptian services.38 GAFI, in coordination with the IMF and its affiliated organisations and a consulting firm, complemented the Free Zones with ‘Investment Areas’. By 2008/9, five had been established and 15 more were in the approval process.39 Some of the investments established through the Industrial Free Zones might seem questionable from a domestic market perspective, but make more sense within the globalisation framework that assigns roles internationally in the division of labour and in the

164

US ECONOMIC AID IN EGYPT

channelling of productivities. For instance, one large project that was guided by GAFI in cooperation with a private sector Egyptian firm involved investing in the planting of wheat, rice, beans ( ful) and corn in Sudan – not Egypt. GAFI marketed the project as one that strengthened ‘regional solidarity’. There were many such examples of investments in Sudan.40 This type of investment did not help alleviate structural problems that Egyptian agriculture and food security faced. Egypt remains dependent on importing American wheat while Egyptian agricultural labour is forced to abandon farming. The agricultural sector garnered the smallest share of investments over the time period between 2004 and 2009.41 The overall impact of the Free Zones on FDIs was positive. FDIs increased from US$ 3.9 billion in 2004/5 to US$ 13.2 billion in 2007/8 – 362.7 per cent – only to fall back after the global financial crisis to US$ 8.1 billion in 2008/9.42 As pointed out in Chapter 2, there was a caveat to FDIs. Even though the Nazif cabinet boasted about the large increase in FDIs that occurred during its time in office, the rise was due to the accounting innovation by the Minister of Investments Mohyeddin, who recorded gas and oil investments as a lump sum not as they are, investments over a long period of time. The new accounting was responsible for a good portion of the increase in investments from abroad since most FDIs poured into the oil and gas sectors. There was a total of US$ 41.5 billion of FDIs between 2004 and 2009; the highest sector to receive FDI funds was the oil sector and the amounts trended upwards over the five years for a total of US$ 16.8 billion. Mergers and acquisitions with non-resident companies and sales of productive assets to foreigners steadily rose from 2004, peaking in 2007/8.43 Another positive development was the rise in GDP. The GAFI report, citing Central Bank statistics, stated that GDP rose 7.2 per cent in 2007/8 from only a 4.5 per cent rise in 2004/5. The report attributed the late fall in growth to 4.7 per cent in 2008/9 to the decline in investments due to the global financial crisis. Capital financial flows peaked in 2007/8. Most investments were in the industrial sector, which includes the oil and gas sectors, or in sectors that could return a quick profit: namely, financial, real estate/construction, tourism and services.44 The number of firms in the Free Zone areas rose from 118 (US$ 406 million in capital in 2004/5) to 159 (US$ 1316 million in capital in

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GAS

165

2006/7), only to fall to 72 (US$ 170.4 million in capital in 2008/9). Again, the report attributed the decline to the financial crisis. Towards the end of the period under review (2008–9), employment in the Free Zones declined by more than 6 per cent, FDI declined by 6.5 per cent, working capital by almost 30 per cent and wages by more than 5 per cent. Capital investment in these firms peaked with the global financial bubble (and the Egyptian stock market bubble) in 2006/7.45 (See also Table 3.4 for FDI data.) The above statistics indicate that the economic impact of the new territorial reorganisations of trade had mixed results. The economic success or underperformance of these zones was integrally tied to the health of the global financial market and appetite for risk. The organisation of private enterprises – some of which have business relations and linkages with the public sector – into new institutional and territorial frameworks for trade and production had other economic effects that contradicted the regime’s enthusiastic proclamations about the benefits of QIZ. The Nazif government had cut customs duties from an average of 14 per cent to 9 per cent in order to boost industrial production and had halved income taxes in order to boost economic growth. Yet, the main reason FDIs increased was because fuel prices rose between 2005 and 2006 which, in turn, led to higher cash inflows into that sector. According to Reham El-Desoki, an economist at EFGHermes Holding SAE, Egypt’s largest investment bank, ‘[t]he zones have been used as political carrots to set up communities and create jobs while encouraging expansion of industries; yet the zones are set up “in the middle of nowhere”’.46 On the positive side, total exports (including from the Free Zones) grew by 52 per cent between 2007 and 2010, according to the Central Bureau of Statistics and Mobilization. On the negative side, ‘foreign partners’ were exporting more Egyptian oil products to the US than Egypt was (from QIZ zones).47 Concomitantly, imports also grew by 51 per cent, and imports were almost double exports overall (see Tables 3.5, 3.6 and 3.7). Moreover, the effect on the diversification of Egypt’s export base had yet to alter the predominance of resource extraction of raw materials. Raw oil and oil products were consistently and overwhelmingly the top Egyptian export, followed by agricultural products, cotton and metals and their related products. Oil and oil product imports were almost half the value of exports. Concomitantly, technologies, agricultural products excluding

–42.5

1656.1

–12.2

472.6

–3273.2

492.4

–30.9

1125

N.A

4.3

–1555

531.6

268.1

– 1279.7

260.5

–4.6

509.4

–27.3

– 9363.1 7078.2 2632.4 4446 –16441 5587.5 –33.4

2000/ 2001

Source: Balance of Payments, Central Bank of Egypt. *includes FDI in petroleum sector from 2004/5.

–11472 6387.7 2272.9 4115 –17860 5629.7 –1163.1

1999/ 2000

–7175 4,250 2,333 1,916 –11,425 3575 3820

1990/ 91

–71.3

–2372.5

998.9

–3.2

428.2

–15.2

–7516.5 7120.8 2381 4740 – 14637 3878.3 614.2

2001/ 2002

143.6

– 2983.4

– 405.2

– 15.8

700.6

–30

– 6614.9 8205.4 3160.8 5045 –14820 4948.6 1943

2002/ 2003

1508.8

–5155.3

–225.6

113

407.2

–155.7

–7833.8 10452 3910.3 6542 –18286 7317.8 3418.1

2003/ 2004

1000.6

–1856.8

831.1

540.6

3901.8

–39

–10359 13833 5299 8534.4 –24193 7842.2 2910.6

2004/ 2005

1425.8

–4452.1

2764

–729.1

6111.4

–145.3

–11985 18455 10222 8232.7 –30441 8190.7 1751.9

2005/ 2006

2039.1

–8131.4

–936.7

–557.5

11053

–535.6

–16290 22017 10107 11910 –38308 11498 2269

2006/ 2007

Egypt: balance of payments, from 1990/91 to 1992 – 2010, selected data (US$ million)

Trade balance Exports Petroleum Other exports Imports Services (net) Current account balance Direct investment abroad Direct investment in Egypt (net)* Portfolio investment abroad Portfolio investment in Egypt (net) Other investment (net) Net borrowing

Table 3.4

1178

–2235.5

–1373.6

–959.5

13236

–1112.7

–23415 29355 14472 14883 –52771 14966 888.3

2007/ 2008

1251.6

5135.9

–9210.7

–410.8

8113.4

–1340.5

–25173 25169 11004 14164 –50342 12502 –4424.3

2008/ 2009

3004.1

–4123

7879.3

–522.2

6758.2

–976.6

–25120 23873 10258 13614 –48993 10339 – 4317.6

2009/ 2010

QUALIFIED INDUSTRIAL ZONES

AND NATURAL

GAS

167

cotton, and metals were the top Egyptian imports.48 A critical view from the leading newspaper stated that technological imports from Israel as a result of QIZ have ensured that Israel plays a role in limiting Egyptian technological progress, thereby contributing to the decline of Egypt’s industrial development.49 According to the Israeli Ministry of Economy: The positive immediate results of QIZ were dramatic [. . .] total Israeli export [sic] to Egypt in 2004 were 29$ million, in 2005 it climbed to 93.2$ million, some 300 per cent jump-off. During 2006 the total Israeli exports to Egypt continued to climb and exceeded 125$ million [sic].50 There had yet to materialise an important gain for Egypt from trade with Israel. Tellingly, the same site reported Egyptian exports not to Israel but to the United States. Those were US$ 1.23 billion in the year prior to the signing of the QIZ agreement and grew to US$ 2 billion in 2005. Thus, Egyptian exports to the US were the real reward for normalising a regional pattern of trade – through QIZ – that was clearly more (bilaterally) beneficial to Israel. The positive effects for the Egyptian economy were limited. According to the QIZ Authority, the value of Egyptian imports of Israeli contents in QIZ products in 2005 totalled US$ 36 million (Table 3.3). According to Egyptian Ambassador Gamal Bayyoumi (Head of the Euro–Egyptian Partnership Program), over time, the Egyptian component of QIZ export products did not exceed 11.6 per cent, with almost 90 per cent of the export inputs having originated in China, Israel or East Asia.51 Thus, the customs breaks granted to QIZ exports did not benefit the Egyptian textile industry. In 2005, exports from QIZ totalled US$ 288.6 million, only US$ 13.5 million of which were to Israel.52 Prior to QIZ in 1996, Egypt already exported US$ 351.8 million of goods, including oil (or 7.36 per cent of Egypt’s total exports) to Israel.53 Therefore, as a percentage of the whole, the contribution of increased trade from QIZ was relatively insignificant. Worldwide, Egyptian exports grew from US$ 11 billion in 2005 to over US$ 25 billion in 201054 (Table 3.6). Yet that gain was offset by Egypt’s total imports which grew even more than exports, from over US$ 19 billion to almost US$ 47 billion between 2005 and 2010, helping expand the trade deficit (Table 3.7).

168 Table 3.5

US ECONOMIC AID IN EGYPT Egypt’s total exports and imports, 2001 – 10 (LE million)

Year

Exports

Imports

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

16,490.841 21,145.475 36,811.897 47,677.801 61,618.140 78,863.719 91,255.903 143,026.700 128,489.938 154,850.399

50,659.141 56,482.191 650,82.712 79,706.798 114,687.527 118,483.176 152,586.331 287,759.032 249,965.115 300,361.020

Source: Central Agency for Public Mobilization and Statistics (CAPMAS).

The employment statistics emerging from the QIZ zones are also indicative of the marginal benefits for Egypt from economic alignment. The private sector employs 16.5 million Egyptians, according to official statistics. In 2007, the average wage was only US$ 53 a month. Part of the reason that wages were so low was the expansion of employment in the private sector. There was a legal basis for suspending some rights of labour. Law 43 (1974) was among the first to be passed by the Sadat regime in order to encourage investments from Arabs and foreigners. It cancelled labour rights and adherence to all domestic laws concerning labour employed in Arab and foreign investments. The law was later extended to include the private enterprises of Egyptian capitalists.55 In general, the government did not enforce labour protection laws and wages were determined by the private employers – who took advantage of the large pool of unemployed people. Therefore, there was an underside to the new employment opportunities that undercut the promised benefits that the regime claimed would ensue from QIZ. The actual results did not alleviate criticisms of the government’s narrative. Al-Ahram Center for Political and Strategic Studies noted several problems. First, any talk of employment ignored that there were already people working at the enterprises that geographically fell within QIZ territories (the new map of free-market aligned economic production). Second, even though Egypt suffered from high rates of unemployment, QIZ areas employed 1,903 foreign workers in 2005, the

7.1

7

8.76

11

2005 14.33

2006 24.22

2007 29.85

2008

23.09

2009

25.34

2010

Source: Egypt Exports, Index Mundi. Available at http://www.indexmundi.com/g/g.aspx?c¼eg&v ¼ 85 (accessed 2 February 2014).

7.3

2004

4.6

2003

Egypt

2002

1999

Country

2000

Total Egypt exports, 1999 –2011 (US$ billion)

Table 3.6

27.91

2011

164

15.2

14.75

19.21

2005 24.1

2006 35.86

2007

56.62

2008

45.56

2009

46.52

2010

Source: Egypt Exports, Index Mundi. Available at http://www.indexmundi.com/g/g.aspx?c¼ eg&v ¼ 85 (accessed 2 February 2014).

17

2004

15.8

2003

Egypt

2002

1999

Country

2000

Total Egypt imports, 1999 –2011 (US$ billion)

Table 3.7

53.97

2011

QUALIFIED INDUSTRIAL ZONES

AND NATURAL

GAS

171

largest proportion of whom were Israeli, which raised reservations about the implications for Egyptian sensitivities about security. Third, companies that qualified to enter QIZ were mainly those with over 300 employees.56 These numbers are large by Egyptian private company standards and are less common than medium and small firms, which constituted 70 per cent of enterprises even in Industrial Free Zones.57 Only a small number of those firms had any experience with exports. In other words, QIZ was benefitting business magnates and their firms, specifically those in the textile industry. Finally, most Israeli manufactured goods were predominantly more expensive than their domestic or Chinese and Indian counterparts. The think tank attributed the ability of Israeli businesses to impose higher prices to the ‘monopoly position’ of Israelis in QIZ, since the protocols made access to US markets contingent on the inclusion of an Israeli partner.58 The end result of QIZ, in practice, was that it increased Egyptian imports from Israel at higher prices than their comparative prices worldwide or domestically. Eventually, the positive effects from QIZ on Egyptian exports to American markets were undercut by the end of the quota system for imports in the US. Thereafter, Egypt could not compete with China in American markets and Egyptian exports declined, relatively, despite the free customs duties that it enjoyed on its QIZ products. According to the US Census Bureau, even though Egyptian exports to the US increased by 8.1 per cent following QIZ (2004– 5) they were still relatively small, valued at only US$ 627 million. By contrast, total US exports to Egypt were around US$ 3 billion for the same period, doubling by 2008. Imports from the US increased by three-quarters of the total amount of exports to the US, thus almost cancelling the net gain on the trade balance.59 As happened afterwards with the natural gas agreements, most critics read QIZ as the State abandoning its leadership role for the benefit of businessmen who were connected to the United States and to Israel. QIZ represented a form of ‘surrender’ (istislam) that purposely marginalised and superseded the role of foreign ministry experts from any negotiations. In contrast, the Egyptian Foreign Ministry had successfully concluded a prior economically viable and advantageous treaty with the European Union. Moreover, critics charged that QIZ in particular was a retreat by the government from the more widely endorsed (by other business people,

172

US ECONOMIC AID IN EGYPT

intellectuals and even labour) conclusion of an FTA with the United States.60 QIZ was a step in merging Egypt within the American vision for a ‘New Middle East’. It served another dominant purpose: mapping alignment. The trade agreement with Israel signed by the Nazif government required that private enterprises be located within the territorial spaces of the new Industrial Zones. As such, the territoriallybased normalisation distributed the physical concentrations of workers away from older industrial towns, such as Helwan. According to noted labour activist Ilhami al-Mirghani, the aligned, integrate-able areas had employed/displaced around 100,000 workers by 2009; labour protections were suspended therein; unionisation was not allowed in free trade zones and penalties for violations of labour laws were not enforced by the government.61 The new organisational mapping also segmented and reshuffled the business class (see below). Under Nazif, the Free Zones partly became locations where disguised normalisation with Israel can occur, under the dominant discourse of ‘free trade’. Significantly, QIZ was criticised for granting Israel entry points into Arab markets. While most investments in these zones were Egyptian, the most important foreign investment capital came from Gulf Arabs. Foreign investors could take advantage of state incentives. According to the GAFI, the United Arab Emirates (UAE) and Saudi Arabia were among the largest investors from 2007 to 2009.62 Thus, QIZ was a turning point for Israeli trade with the region; the signing, first with Jordan and then with Egypt, provided (disguised) access to Arab regional markets. QIZ also enlarged the previously miniscule (official) trade in the two states with which it had signed peace treaties. The QIZ framework specifically targeted and created opportunities for regime-connected and business elite who choose to incorporate within US-dominated and normalising trade. Comparing Tables 3.8 and 3.9 reveals that normalisation-friendly businesses within the private sector were advantaged. According to the QIZ Authority (Table 3.8), total exports by QIZ businesses rose from US$ 288 million in 2005 to US$ 858.2 million in 2010. Meanwhile, imports by QIZ firms increased by relatively much smaller amounts, from US$ 36 million in 2005 to US$ 90.4 million in 2010. This result contrasted with the wider economy: according to the Central Bank, Egypt’s trade deficit increased two and a half times over the same time period, as a result of a doubling

Textile and RMG exports value products

61.6 116.2 110.5 288.3 117.5 164.3 177.7 176.7 636.2 166.7 182.5 187.9 151.2 688.3 169.4 184.1 205.6

Q.2 2005 Q.3 2005 Q.4 2005 Total 2005 Q.1 2006 Q.2 2006 Q.3 2006 Q.4 2006 Total 2006 Q.1 2007 Q.2 2007 Q.3 2007 Q.4 2007 Total 2007 Q.1 2008 Q.2 2008 Q.3 2008

0 0 0.207 0.207 0.530 0.439 0.078 0.211 1.259 0.079 0.081 0.101 0.290 0.553 0.137 0.043 0.479

Food value exports products 61.6 116.2 110.7 288.6 118.1 164.7 177.8 176.9 637.5 166.8 182.6 188 151.5 688.8 169.5 184.2 206.1

Total exports values 8.3 14.7 12.9 35.9 13.1 18.7 21.3 20.6 73.7 19.9 20.7 21.8 17.9 80.4 18.2 19.4 22

Total import values

Exports and imports value for period 22 February 2005 to 31 December 2011

QIZ data – imports/exports (US$ million)

Quarter

Table 3.8

149 150 149

148 155 142 147

96 137 139 146

54 70 85

QIZ exporting companies

184.6 743.7 190.5 186.5 200.6 184 761.5 210.2 201.1 233.1 211.3 855.7 470.9 453.1 924.1 4897.7

Textile and RMG exports value products 0.295 0.954 0.688 0.792 0.378 0.409 2.266 0.718 0.946 0.524 0.320 2.508 4.011 3.5 7.5 15.3

Food value exports products 184.9 744.7 191.2 187.3 200.9 184.1 763.5 210.9 202 233.6 211.6 858.2 474.9 456.6 931.6 4912.7

Total exports values 19 78.6 20.2 19.8 21.4 19.1 80.5 22.4 21.4 24.8 21.8 90.4 49.7 47.7 97.5 537

Total import values

Exports and imports value for period 22 February 2005 to 31 December 2011

Continued

Source: QIZ Authority. Available at http://www.qizegypt.gov.eg/QIZ_Data.aspx (accessed 1 February 2014).

Q.4 2008 Total 2008 Q.1 2009 Q.2 2009 Q.3 2009 Q.4 2009 Total 2009 Q.1 2010 Q.2 2010 Q.3 2010 Q.4 2010 Total 2010 Q.1,2 2011 Q.3,4 2011 Total 2011 Grand Total

Quarter

Table 3.8

168 152

151 146 141 153

152 142 146 153

149

QIZ exporting companies

0 0 0 1

0 0 0 1 0 1

0

0 0 0 1

23 0 0 0 0 10 27

11 0 1 1 8 12

0 0

2004

1 2

2003

1

0

52 0 4 4 0 3 19

0 1

2005

0 0 0 3

1 0 0 2 12

0 0 246 25

2006

1

1 0

2 14

1 1

17

0

2007

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (data treated and classified by EITP).

11 0 0 6 10

1 1 0 14 0 3 0 0 8 14

2002

4 0 22 18

2001

Egypt imports from Israel by commodity sectors, 2001 –10 (LE million)

Agriculture Foodstuffs Fuel Chemicals Leathers Books and papers Spinning cotton and textiles Ceramic products Metals Engineering and electronics industries Furniture Marble and granite Glass Other

Sector

Table 3.9

2 0 0 1

150 0 42 120 0 3 29

1 1

2008

2 0 0 1

10 27

3 2 0 110 0 38 137

2009

5 0 0 7

4 2 0 142 1 48 192 0 9 36

2010

176

US ECONOMIC AID IN EGYPT

in the size of imports. (Table 3.9) In other words, while economic alignment granted financial gains to QIZ companies from increased world exports, it correlated with a decline in the Egyptian balance of trade overall. QIZ gave Israel veto power over whether or not Egyptian products were allowed to enter the US. Israel was the key to verifying whether or not QIZ firms and business people continued to adhere to the treaty, thereby aligning with American policy objectives of encouraging normalising businesses. At the international level, the QIZ treaty structured a hierarchical arrangement among international business elites (even if domestically, the Egyptian tycoons were relatively stronger). Specifically, QIZ provided a locale from which Israel could sell certificates of Israeli components so that Egyptian business people could circumvent US laws. Finally, Israeli businesses could now partner with Egyptian businesses so that Israeli products would bear a ‘Made in Egypt’ mark of origin. The Egyptian mark of origin would allow these businesses to circumvent the official Arab boycott of Israeli products as well as mitigate the unpopularity of Israeli products among many Egyptians.63 Thus, QIZ was a means to advance economic normalisation of Israel, using private routes and with American guidance. Critics perceived the United States’ role as the enabling link in the production of a political and strategic defeat of Egypt, while simultaneously handing a political pass for the Mubarak regime. According to critics of Mubarak, such as Rif ‘at Sayyed Ahmed, QIZ was signed not because it made any economic sense for Egypt but because the United States was using the lever of political reforms as ‘blackmail’ in order to induce/force QIZ as a prize concession.64 There were political reasons for opposing QIZ in addition to the economic ones listed above. Labour, the organisations involved in the boycott movement and some of the opposition parties, such as AlTajammu‘ and the Nasserites, objected to QIZ for numerous reasons. QIZ represented executive fiat over legislative jurisdiction. It was signed without constitutionally required parliamentary debate or approval – even though the parliament at the time (2005) came by allegedly rigged elections. Critics argued that QIZ contradicted and overturned ‘the national fundamentals of Egypt’ (thawabit misr al-wataniyya) and was against the ‘will of the people’ (iradat al-sha‘b), which made relations with the Zionist state conditional on a just settlement for Palestinian

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GAS

177

refugees, ending the occupation, a comprehensive peace agreement and the removal of weapons of mass destruction in Israel.65 Noted labour rights activist and organiser Kamal Khalil headed the National Labor Movement (Al-haraka al-‘ummaliyya al-wataniyya) which was strongly against normalisation. He insisted that all the leaders of the labour movement (who were not regime-appointed) never visited Israel. They further organised protests to oppose state visits by Israeli officials to Egypt.66 The protest at the Annual Book Fair against Israeli participation is a famous example that provoked much controversy.67 Importantly, Khalil said that ‘all labour’ – except government appointees – was against QIZ and other forms of normalisation. Lists of participating companies that were involved in normalisation through QIZ were published and distributed in Egypt and in the rest of the Middle East. Labour also exhibited cross-national solidarity with Palestinian resistance: some participated in the al-Aqsa Intifada in 2001, others in sending aid convoys to Gaza to break the international boycott, and the movement as a whole was against the US war against Iraq in 2003. There were instances of cooperation and joint activism between leftists and labour, for example, during the strike at al-Mahalla textile plants. Khalil noted that the Socialist Revolutionaries were especially active in reaching out to labour. According to him, the prime demands of the labour movement, could not be achieved within the QIZ framework: ‘fair wages, regaining the original lost international right and al-Aqsa, the return of (privatised) companies, ending the practice of temporary, insecure jobs and making work more secure and permanent, and instituting minimum levels of social security’.68 By privileging business magnates in the textile and clothing sectors with American and Israeli connections, the treaty raised other danger signals for the leftist opposition. They were concerned that the QIZ agreement cultivated normalising business people who would have a built-in incentive to oppose any possible FTAs with Arab states. If one were to exist, then they could not benefit directly because the existing regional boycott would automatically exclude their products. These dimensions of QIZ were noted and criticised within state institutions as well – for example by officials at the Ministry of International Cooperation in charge of all economic exchanges with the European Union.69 Therefore, the partnered segments of elite and businesses which QIZ generated, with US direction, structured an

178

US ECONOMIC AID IN EGYPT

economic role for Egypt that lay within a hierarchical orbit and that simultaneously had the potential to become a disincentive to furthering regional Arab trade and integration. QIZ had another unintended consequence for the type of domination that is produced via globalised private sector linkages: it divided the capitalist class. Links were selectively focused and forged by taking advantage of differences among potential allies and private firms. In other words, QIZ was a means of circumventing capitalists who held different ideas from the dominant ones about what a ‘reformed’ market, relations with labour, purposes of production, direction and types of trade, should be.70 The business class in Egypt was not as homogeneous in its attitude about neoliberal reforms and trade with Israel as the term ‘private sector’ would imply. Surveys conducted by Al-Ahram Center for Political and Strategic Studies after the signing of the QIZ treaty in 2005 and 2006 confirmed that while most business leaders (CEOs and administrators in the private sector) welcomed less bureaucracy, the ‘free’ market that they envisioned was more nationalistic, and they saw value in some protections to industry. They expressed concern for social justice issues like wages. The divisions within the business class reflect the following fact: even though business leaders believed in the capitalist framework, many prioritised elements that were not congruent with dominant prescriptions. For example, the domestic preference was for Arab trade. While most (56.9 per cent) felt that free trade was beneficial for the Egyptian economy and most (82.6 per cent) said that their businesses benefited from free trade; the largest proportion (47 per cent) felt that the Arab Free Trade Agreement was the most beneficial, versus only 30.7 per cent for the GATT agreement and 37.4 per cent for a possible one with the United States. Almost half did not anticipate that the QIZ agreement would produce much benefit for Egypt. Finally, most were less impressed with the business benefits of normalisation than official government and American claims would suggest.71 Two years after QIZ, business leaders were split almost in half over their predictions for the future effects of the government’s economic policies. Fifty-eight per cent felt that their firm’s business performance was worse or static. Surprisingly, their negative assessments were given to pollsters at a time when the Egyptian stock market had peaked in

QUALIFIED INDUSTRIAL ZONES

AND NATURAL

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2006. It also coincided with the first two years of the Nazif government and the passage of business-friendly reforms. An overwhelming majority (87 per cent) of business leaders felt that political reforms were very important. Almost 70 per cent felt that the reforms that had already been implemented were insufficient. Socially, the positions of many business leaders were also revealing in that they sometimes contradicted neoliberal recipes in significant ways. In ranking the most pressing problems facing Egypt, unemployment garnered the top spot as the worst problem (30.4 per cent), followed by the currency rate and inflation (16.8 per cent), with corruption in the third spot (15.2 per cent). Unlike donor neoliberal emphases, only a tiny amount of business leaders felt that the trade deficit (8 per cent) and taxes and customs duties (6.4 per cent) were important obstacles confronting Egypt’s growth. In other words, making sure Egypt pays back its debt took a back seat to rehabilitating domestic macro-economic problems. Significantly, only a small portion supported privatisation. The surveys did not specifically ask why business people held these positions regarding privatisation, leaving one to only speculate about the reasons. Perhaps the lack of support was in recognition of the high potential for corruption due to the still unreformed bureaucratic and political systems that increased risks during the sales process. In fact, a surprising 66.4 per cent of business leaders considered reforming the public sector and increasing state investments in it a necessity. Significantly, post-QIZ, there was a decline in the number of people who felt that privatising the public sector was good. The survey writers speculated that perhaps this was a reaction to the acceleration of the pace of privatisation under the new cabinet. These positions reflect a degree of social responsibility. They might also hint at the economic and financial inter-relationships and dependencies that exist between the private and public sectors in Egypt. Another possibility is fear of competition from the fewer, regimeconnected business people, who would benefit the most from the process of privatisation. Business leaders held yet more positions that contradicted dominant prescriptions that became economic policies. Contrary to the Egyptian government’s rush to conclude FTAs, most business leaders felt that the primary obstacles to increasing Egyptian exports were domestic – related to quality, weak marketing, uncompetitive pricing (due to bureaucratic obstacles and corruption), export impediments and

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infrastructural problems with shipping and transportation, in that order. As opposed to the neoliberal recommendations to reduce the role of government, business leaders attributed the above domestic obstacles confronting export growth to the lack of institutional oversight (92.6 per cent). Thus, they were not against regulation per se. In fact, most wanted more of it – if it were done fairly and well. Fixing those issues would require a national and internal re-orientation as opposed to having an external focus such as removing barriers to trade. In addition, they felt that not fixing internal problems would impede foreign investments. Hence, the range of attitudes among the business class meant that it is not simply ‘capital’ that determines the affiliation and outlook of effective players. Many Egyptian capitalists expressed a domestically focused nationalist agenda. Nevertheless, aid and its associated economic and business policy ‘reforms’ continued to be focused selectively, with a predilection for normalising Israel. Because only a tiny number of enterprises benefited (five companies did more than 90 per cent of the textile trade in QIZ72), the privatisation method of normalising peace meant that not all business people were or could be targeted or integrated. Many did not benefit (directly and proportionately) from the newly privatised and hegemonically-linked ‘free’ and ‘normalising’ markets. Some critics, like al-Naggar, expressed their objections about this selective focus directly to American workers at USAID. Al-Naggar made specific suggestions about how to redirect and expand the targets of aid to include the largest possible number of ordinary and poor people, with little to show for his efforts.73 Critics at the Center for Socialist Studies of the Egyptian Revolutionary Socialist Movement objected to QIZ for similar reasons. They charged that QIZ was a deceptive framework, sold by a tiny (seven to ten) lobby (loby al-quiz) of business magnates with ties to Israel, who pressured the government and deluded the country with unrealistic promises, none of which came true. They argued that, on principle, QIZ was the fruit of the normalising penetration into the body politic as well as the economic structures of the State whose purpose was to hijack its decision making capacities in order to redirect policies and benefits. After all, most of the 470 companies registered in QIZ in 2006 had never exported a single item, while the ten largest companies accounted for more than half of all exports. Only 70 firms exported anything at all.74

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The assessment of the ‘American program of privatisation’, to quote another opposition economist, Salah Gouda, is also negative.75 His widely-disseminated study of American aid estimated that it cost Egypt LE 2.5 trillion and resulted in the unemployment of 600,000 workers. In addition, the study estimated that 1,200 US companies export their products to Egypt. Gouda’s assessment that American aid resulted in unequal trade relations is confirmed by the Office of the United States Trade Representative, which stated that Egypt imported US$ 5.2 billion in 2013 and had a US$ 3.6 billion goods trade deficit with the US.76 In other words, the US$ 2.1 billion in yearly aid is less than half of Egyptian imports from the US. Like other opponents of these policies, Gouda saw a direct link between US aid and the Mubarak regime’s ‘subordination’ (taba‘iyya) as well as treaties such as QIZ, positing that the US compelled the regime to sign various treaties under the threat of cutting off aid. Gouda argued that QIZ was the most dangerous because it freed the Egyptian and Middle Eastern markets for American and Israeli goods, helped destroy the Egyptian economy and caused the exit of 70 per cent of Egyptian companies from world markets, closing hundreds of factories that could no longer compete with American, Israeli and Chinese competitors. In addition to the economic harm from QIZ, he added political and strategic costs. Gouda estimated that annual losses from privatised revenue streams as a result of the sales of SOEs were LE 3.1 billion. Numerous other economists documented the high costs of US aid and of privatisation in Egypt.77 Economic outcomes were not always supportive of dominant neoliberal optimism about QIZ. Even though the government obfuscated assessments of QIZ, it was relatively easy to expose its negative underside simply because counterpart statistics are also reported in Israel and in the United States. Two years after the 2006 QIZ Agreement was launched, the promises of 400,000 new jobs had yet to materialize. Unemployment rose from 8.1 per cent at the end of the Ganzouri government to 10.3 per cent at the end of the ‘Ebeid government, and then to 11.2 per cent by 2005 under the Nazif government.78 According to the Egyptian Ministry of Economic Planning Report to the UNDP, ‘Egypt’s Progress towards achieving the Millennium Development Goals, 2010’, the unemployment rate was around 9.4 per cent in 2009, mostly concentrated in the informal sector and in the private sector.79 These unemployment

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numbers were disputed by Egyptian critical economist al-Naggar, based on discrepancies between the statistics produced by the Central Agency for Public Mobilization and Statistics (CAPMAS), on the one hand, and official executive branch reports to parliament or from the Central Bank, on the other. The discrepancy originates in (under)estimates of the size of the labour force.80 According to the report by the Ministry of Economic Planning, the quality of jobs created was poor, with 75 per cent between 1998 and 2006 in the informal sector ‘neither productive nor decent’. The report noted that even in the formal private sector, health insurance and social benefits were ‘seriously reduced after the new Social Insurance Law and the proposed Heath Insurance system’. Those working in permanent jobs dropped from 89 per cent in February 2005 to 82 per cent by February of 2008. Those working in ‘occasional jobs’, and thus more likely to fall into poverty, constituted 37 per cent of the labour force.81 As mentioned above, privatisation also had detrimental effects on the average wage. According to the CAPMAS 2009 Yearbook, the number of employees in the private sector was double (15.1 million) that in the government and public sectors (6.4 million). The average salary was LE 987/month in the private sector versus LE 1,320/month in the public sector. The unequal incomes were more exaggerated in the national distribution of GDP. According to the same source, employees received 30.3 per cent, while asset owners (mullak) received 69.7 per cent. Notably, in 1985, before the privatisation wave, labour/ employees received 48.5 per cent of national GDP.82 Moreover, the very high rates of inflation that Egypt experienced during that period naturally benefited property owners and hurt those with fixed incomes and/or salaried wages. The privatisation of SOEs led to more worker protests and the filing of lawsuits that only sometimes altered the terms of the deals.83 Often, the regime refused to repossess firms even when the courts declared some of the sales null and void.84 However, in some cases where workers received some concessions they still ended up disempowered by privatised methods of compensation. Harmful effects of these policies were exacerbated for laid-off workers, most of whom did not have access to sufficient retraining and re-employment opportunities.85 Moreover, severance packages were often spent to satisfy immediate needs, as opposed to being invested in economically productive opportunities.

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Ahmed Abu Zeid, Deputy Minister of Investments, cited a study undertaken by the Ministry that examined how laid-off workers spent their negotiated severance packages. Most spent the money on family, for example, paying for their sons’ and daughters’ weddings.86 After QIZ, exports to the US did increase but by a relatively miniscule amount between US$ 60 and 70 million over base exports. Importantly, Egyptian imports from Israel increased by more than US$ 100 million, indicating that the illusory promise of success in the American markets thanks to QIZ was between US$ 30 and 40 million short of what Egypt lost by opening its markets to Israel.87 The results of aid-driven normalisation can be gleaned from Egypt’s trade statistics with Israel. Table 3.2 shows that Egyptian imports from Israel exceeded exports to Israel (excluding oil) in 13 of the 15 years between 1995 and 2010. Moreover, it also shows that the overall size of trade exchanges between the two states rose significantly after 2004, coinciding with the official merger of the pro-normalisation members of the regime-connected business class into the Nazif government. Table 3.9 shows the reversal of Egypt’s trade advantage even in the trade of textiles and fabrics after QIZ: imports increased from almost nothing to LE 192 million in 2010. Despite QIZ, however, trade with Israel and the US was less than with the European Union, most cumulative investments were with the Arab world and the size of Egyptian exports and trade with Saudi Arabia and Syria vastly exceeded trade with Israel. In fact, by 2004, Syria was the biggest export market for Egypt in the Middle East.88 Significantly, the distribution of Egyptian trade was skewed in favour of trade with industrial countries at or above 50 per cent for most of the years under review.89 The economic reforms to encourage FDIs show a structuring of the parameters for Egyptian exchanges with the rest of the world that did not necessarily add to the country’s productive capacity. FDIs increased sharply post-Nazif, rising from a little over US$ 1 billion and peaking at almost US$ 11 billion in 2007, only to fall to US$ 5 billion in 2010.90 According to the Central Bank of Egypt (Table 3.4), FDI from the US were relatively insignificant, especially when measured from a cumulative perspective. Portfolio investments, some of which proved to be speculative capital by investors seeking short-term gains, formed a significant proportion of foreign investments – constituting at least half and often exceeding FDIs in Egypt, especially in the years

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1999–2001, 2002/3, and 2009/10. Portfolio money fled Egypt in 2003–5 and 2007– 10. Significantly, ‘other investments’ were negative for the entire time under review (Table 3.4). In the non-oil sector, cumulative US investments were US$ 486 million, or only 6.8 per cent of the total Arab and foreign investments in Egypt.91 Cumulative assets indicate a deeper commitment to the country, as opposed to speculative money flows into financial paper assets. Later publications of Taqrir al-Ittijahat al-Iqtisadiyya alIstratijiyya, for example in 2007, 2008 and 2009, all reiterated that the development of intra-Arab trade would be far more beneficial for Egypt than all the other investment and trade initiatives and protocols that had been signed.92 This viewpoint was based on the rates of cumulative investments by Arabs in Egypt. In addition, because most US FDIs in Egypt were in the oil and gas sectors, which are resource extractive and capital intensive, they neither add much to employment nor enhance the value-add of Egyptian exports. The reports criticised the export of natural gas to Israel, noting that resource extraction was occurring in a country that did not have excess supplies to begin with. Mainstream economists like el-Beblawi also disputed the official FDI numbers. They argued that if privatisation and oil investments were subtracted from FDI, then the numbers would be significantly less than those that had been published.93 As explained in the Chapter 2, because privatisation is counted as FDI even when there are no new investments in new assets, and because oil and natural gas are of a depleting nature, those FDIs do not contribute to Egyptian growth in productivity. Other macro-statistics showed mixed results from aid and neoliberal economic policies in Egypt. The poverty level rose from 19.4 per cent in 1995 to 21.6 per cent in 2009, although extreme poverty was reduced by half. Official reports of income distribution indicate ‘moderate inequality’: the General Indicator of National Inequality coefficient (GINI) decreased from 36.1 in 2000 to 31.1 in 2009, indicating improvement in income/expenditure equality during the decade.94 Income distribution figures, however, do not address the sizable illegal trade in antiquities, drugs, arms and so forth, the majority of which went to top income earners. Some estimate that the black and shadow economies in Egypt are at more than half of GDP – all of which is untaxed.95 Meanwhile, the trade deficit increased exponentially by 2007,

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to reach 102 per cent of GDP, despite concomitant large increases in revenues from tourism, the Suez Canal and remittances. Perceptions among critics included that QIZ is an ‘indirect’ form of aid whose conditions ‘inject Israel as a third party in any relationship between an Arab state and the United States’.96 This was considered ‘annoying’ and ‘humiliating’ for a state of Egypt’s stature. They suggested ‘a more natural method’ for achieving US goals in the region: namely, to implement international law and decisions related to a full resolution of the Arab– Israeli conflict fairly. In addition, the major structural impact caused by QIZ as well as by the broader privatisation of public enterprises was the elimination of Egyptian control over strategic assets and companies. According to opponents, this result indicated that the free market/normalising growth promised by American aid and its related trade structures (QIZ and natural gas), consecrated ‘oppression, exploitation, and colonialism’ (‘turassikh alistibdad wa al-istighlal wa al-isti‘mar’).97 In short, they blamed aid for structuring subordination (taba‘iyya).

The natural gas agreements: A normalisation project within the reforms agenda The export of Egyptian natural gas to Israel was one of the most contentious issues among Egyptians. The terms of the deal, including price, were initially shrouded in mystery. Two sets of agreements bind Israel and Egypt regarding the sale of natural gas. The first is between governments and the second between companies (Israeli, Egyptian and American).98 The latter stipulated that the Egyptian Natural Gas Company (EGAS, est. 1997), a state-owned holding company, would supply natural gas to an Israeli sales and marketing company with American and international partners, at fixed prices and with specific conditions. The agreement between the two governments guarantees delivery for 15 years after 2005, renewable for another five. These agreements are technically not part of the peace treaty signed in 1979, which had only stipulated the sale of Egyptian oil to Israel. The gas agreement, however, fell within the same framework, having become feasible once the Egyptian gas sector was sufficiently developed. Once again the United States was the force in the background that made it

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possible. Negotiations started in mid-1993 and coincided with US pressure on the regime to democratise. Critics accused the US of using the democratic reforms card strategically in order to pressure the regime so that it would grant economic concessions to Israel.99 They also noted that the agreement was part of the US strategy for ‘The New Middle East’ (supported by Israeli president, Shimon Perez) where Israel has the right to become an economic partner in major projects in the region. Once concluded, the agreement also meant that the US struck a major achievement for the normalisation agenda. In following years, it was reported in the Egyptian press that Secretary of State Hillary Clinton personally pressured the Mubarak regime not only to increase gas supplies to Israel but also to lower the (already low) export price.100 Due to the terms of the deal, and to widespread popular opposition, the most effective tool for achieving this feat was a private one. The timeline below describes the circumstances of how these events transpired. It also presents the effects of the deal and legal and discursive reactions. The Egyptian East Mediterranean Gas Company (EMG) signed a 20-year agreement under Minister of Petroleum Sameh Fahmi in 2005 to supply natural gas to the state-owned Israeli Electrical Corporation (IEC). EMG was granted a monopoly to export natural gas without having to submit a tender. EMG was owned by Hussein Salem, who was widely believed to be a front man for Mubarak. Salem was also formerly in Egyptian intelligence.101 The original deal was followed by another contract between EMG and the Israeli firm, Dorad Energy, in 2007, for the sale of natural gas.102 Although the terms were secret, it was widely reported that natural gas was being sold to Israel at less than US$ 2 per ft3 when the market price was US$ 14. An important study by ‘Abd el-Khalek Farouk estimated that the cumulative losses from the sale of natural gas to Israel, France, Spain and Italy between 2002 and 2010 were between US$ 4 and US$ 5 billion per year.103 These deals were and remain controversial in Egypt. The political implications of supplying a precious resource to what most Egyptians still saw as an enemy state were compounded by the economic costs arising from the enormous discount. The flow of gas continued throughout the Israeli war on Gaza in 2008. A lawsuit was filed to ban the export of natural gas to Israel, which the petitioners won. The ruling banning export was overturned following a counter-petition by the Egyptian Prime Minister, Finance Minister and Minister of

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Petroleum.104 The government argued that the gas agreement was solely under the jurisdiction of the State, not the courts or the State Council. Minister of Petroleum Sameh Fahmi used the legal framework of privatisation and free markets to say that EMG was a private-stock company ‘established under investment law’ and ‘we can’t ask this company to sell gas to some countries and not to others’.105 The State claimed that it could not act to prevent this deal because it was an agreement signed by a private Egyptian company. Most Egyptians were still not convinced. In 2009, former Egyptian ambassador Ibrahim Yusri, acting jointly with a wide range of labour, institutional and activist organisations, filed another lawsuit to stop the export of natural gas to Israel. The suit challenged the authority by which a national resource could be taken and sold. It cited Egypt’s large and growing needs and asked if Egypt had any ‘surplus’ gas to export.106 Likewise, the Muslim Brotherhood objected to the sale.107 Wafdists, too, questioned the validity of the deal because it contravened Article 51 of the Constitution, which stipulates that a strategic agreement must be presented, discussed and approved in the Peoples’ Assembly.108 Opposition also came from the Lower House of Parliament, which requested to review the details of the treaty. According to the constitution, the gas treaty qualified for parliamentary review because of its sizable cost. Salem’s daily profit from natural gas deliveries was US$ 2.5 million, against which the State incurred US$ 9.5 million in daily losses and the Egyptian treasury bore the cost of US$ 469 million for construction of the pipeline from the Delta to el-‘Arish.109 Nevertheless, the regime issued Executive Decision (100/2004) preventing legislative oversight. The Executive Decision superseded the law by relegating the rights for selling Egyptian natural gas to the CEO of the holding company for Egyptian natural gas, Ibrahim al-Tawila, and the Manager of the Egyptian General Petroleum Corporation, Ibrahim Saleh Mahmoud. They, in turn, contracted with EMG (Hussein Salem) to sell 7 billion m2 of gas to Israel.110 Despite opposition, this deal signalled to the US that Egypt cooperates with Israel economically. The economic ‘exchange’ was maintained, despite popular opposition and legal challenge, by hiding behind private entities. The circumvention prevented the political and legal challenges that might interfere with supra-national agendas. The secret documents detailing the sale of Egyptian natural gas to Israel were not revealed in their entirety until after the removal of

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President Mubarak, when Al-Masry El-Youm published 30 original documents, many of which had been secret, detailing the sale of natural gas to Israel and Turkey.111 In April 2000, EMG owner and CEO Hussein Salem had sent a letter to Sameh Fahmi, Minister of Petrol and Chair of the Board of Directors for the Egyptian General Petroleum Corporation. It informed Fahmi that GAFI had issued Executive Decision (1020/2000) granting EMG a licence to register and operate. Despite the low price, the Egyptian General Petroleum Corporation agreed. According to the court, the executive decision to sell natural gas to EMG contravened Article 4 of the Code of Operations and Trade for the Agency, which stipulated the need for bids. Bidding was also the rule according to the Ministries of Industry and Mining, of Petrol, and of Electricity.112 The entire board of directors of the public institution agreed to the sale despite the fact that the engineer the board had assigned to report on the merits of the deal, Ibrahim Kamel, had concluded that it did not make economic sense. According to Kamel, the cost of producing the gas from Egyptian fields averaged US$ 1.5 per BTU when Brent Crude was US$ 18 per barrel. It increased whenever crude prices rose – which they were doing at the time. More importantly, Kamel concluded that Egypt did not possess large enough reserves of gas to warrant exportation.113 The CEO, Sameh Fahmi, dismissed the report and modified the numbers. He excluded from the total cost to Egypt both taxes and expenses which the Egyptian General Petroleum Corporation would pay for itself and on behalf of the foreign partner.114 Fahmi then produced new calculations that reduced the price of production to 67 cents. In response, Kamel objected and went public, exploding the issue in the national media. Even though all of these individuals were public sector employees from various government agencies and ministries, those in charge did not act in the public interest. The documents also revealed a pivotal role by Chief of Intelligence ‘Omar Suleiman and the Minister of Petrol Sameh Fahmi in securing the deal for EMG.115 The correspondence, which started on 19 January 2000, under the government of Prime Minister ‘Atef ‘Ebeid, showed that it was outside of institutional norms. Suleiman frequently intervened with the Minister of Petrol to address Israeli complaints. Under the terms conveyed by Suleiman to Salem, EMG was the entity that would act as intermediary between the Ministries of Energy in

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Turkey and Israel and their counterpart in Egypt. General Intelligence set the schedule for the Ministry of Petrol to complete the project. General Intelligence also intervened with the Bureau of Investments to register EMG as the executing company, which occurred promptly thereafter, on 29 January 2000. Significantly, EMG was established within the reconceptualised and reorganised framework of trade normalisation in the Free Zones of Egypt. EMG would buy and export to Israel and Turkey all ‘excess’ gas produced by the Egyptian General Petroleum Corporation by foreign natural gas investment companies that operate in Egypt. Thus, contrary to the constitution, which specified the public ownership of natural resources, Salem’s EMG was granted monopoly rights for all excess production of Egyptian natural gas.116 Later in January 2004, Suleiman again intervened with the Minister of Petrol to sign a contractual amendment. In 2005 under the Nazif government, Suleiman sent a ‘Very Secret’ letter to the Egyptian General Petroleum Corporation for a special agreement between the governments of Israel and of Egypt. The agreement was to be signed with EMG by Minister of Infrastructure in Israel Benyamin Ben Eliezer and the Israeli Electricity Company. The above was followed by another ‘Very Secret’ letter in October 2005 to Minister of Petrol Sameh Fahmi to allocate/privatise an allotment of land and issued a US$ 180 million line of credit for the EMG project to continue executing the contracted delivery to the Israeli Electricity Company. The letter referred to an earlier executive decision (No. 323, 1998) by the governor of Northern Sinai that had privatised 960,000 m2 for use by the Egyptian General Petroleum Corporation. The privatised allotment was to be used for the implementation of the planned project for natural gas in Shaykh Zuweid, close to el-‘Arish. The Egyptian General Petroleum Corporation was to privatise 200,000 additional square meters in order to supply the project with the necessary equipment and technical and electrical facilities.117 In the meantime, feeling the brunt of popular displeasure and activism, EMG was slow to sign the new contracts.118 At the same time, the Israeli side had been pressuring the Egyptian General Petroleum Corporation to extend deliveries of gas to 2011, which again prompted intervention by Suleiman. The above example illustrates how an Egyptian national institution, the Egyptian General Petroleum Corporation, was used by insiders

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among the administrative, executive and business elite. Their alignment with the American dominant strategic goals was consensual – structured around the ability to profit (exponentially) by leveraging their positions at the apex of state organisations and via private normalising companies. The same pattern of institutional co-optation, interventionism, arbitrary decision making and supersession of established norms and authorities repeated a few years later. In 2007, EMG sought to expand its operations to handle the gas pipeline in Israel. Israel, however, refused to grant a tax waiver, forcing EMG to subcontract with Israeli companies. In the process, 18 new agreements were signed. As a result, the Egyptian General Petroleum Corporation gave EMG 960,000 m2 plus another 400,000 m2 for US$ 527,600 dollars ($1.3/m). By comparison, just renting land from the Israeli EilatEshkelon Pipeline Company and Erit for Infrastructure cost US$ 5.7 million plus tax for 15 years.119 In short, the public institution in charge of petrol in Egypt guaranteed deliveries of gas to EMG for later sale to Israel: it distributed previously publicly-owned but now expropriated/ privatised land to a private company, EMG, for a fraction of what EMG paid to rent land in Israel. The entire monopolistic arrangement was helped along by the political intervention of allied elite and incorporated leaders within Egyptian institutions and intelligence apparatus.120 A corollary event that may have enhanced the activism of Egyptian intelligence included the fact that after 9/11, the new focus on security and ‘fighting terror’ marked a rise in cooperation between American, Israeli and Egyptian intelligence services. Suleiman was central to this relationship. Suleiman also received separate funding from US aid for functions related to ‘guarding’ the border with Gaza against tunnels, smuggling and violence against Israel.121 Enough about the deal was leaked and published in the Israeli press to generate widespread Egyptian popular and intellectual reactions against the sale. More fundamentally than price, most Egyptians objected to the very idea of exporting a scarce natural resource to a state that was still widely considered an enemy and was even referred to as such in the Egyptian constitution.122 A main oppositional theme was ‘dissipating the public wealth’ (ihdar al-mal al-‘am). Critics in the main newspaper, Al-Ahram, viewed the export of gas as a successor to the (wrongful) export of oil that had accompanied Camp David and that would

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eventually render Egypt a net energy importer (at much higher prices in the future).123 (Whether Egypt is a net importer or exporter of oil is indeterminable from official Egyptian statistics. While the Central Bank of Egypt reports that Egypt has had a deficit in oil exports since 1998, the Central Agency of Public Mobilization and Statistics reports a surplus.124) Egyptian public opinion was overwhelmingly opposed to the sale of gas to Israel. Close to 40,000 men and women in the legal profession joined the ‘No to the Export of Gas’ initiative.125 So did some Members of Parliament, such as Hamdeen Sabahi (Independent) and Muhammad Anwar ‘Ismat al-Sadat (Labor), nephew of the former president. The heads of all political parties (other than the ruling NDP) as well as of many popular movements and rights organisations, experts and former officials in the oil and gas sectors and others also joined. There was activism, both spontaneous and organised, including by the intellectual and political elite. For example, R.S. Ahmed of the Yafa Center for Strategic Research and other intellectuals helped to mobilise the public, wrote many articles, gave television interviews, signed petitions and gathered powers of attorney (tafwidat wa tawkilat) granting Ibrahim Yusri, Deputy Foreign Minister and head of the Administration of International Law and International Treaties, the legal right to file the lawsuit on behalf of a wider coalition in society.126 Labour activist Kamal Khalil, along with labour rank and file that he organised, also joined the lawsuit.127 Yusri had been nicknamed the ‘mischievous ambassador’ (al-safir al-mushaghib) by President Gamal ‘Abd el-Nasser. He was later popularly referred to as ‘Ambassador of the People’ (safir alsha‘b) after he filed the lawsuit against the sale of natural gas to Israel then headed the activist protest movement ‘No to the Sale of Gas to the Zionist Entity’ (la li-bay‘ al-ghaz li al-kiyan al-suhyouni), and also launched activist protest movements via Facebook, for example ‘No to the Gas Setback’ (la li-naksat al-ghaz).128 Opposition came from within the State apparatus as well. The suit filed by Ambassador Yusri was on behalf of himself (at the Foreign Ministry) and 30 other organisations, including labour, against the Prime Minister, the Ministry of Petrol and the Ministry of Finance. Again, a different institution, the Foreign Ministry, which ought to have had jurisdiction, was superseded by partnered normalising allies within other ministries and institutions. The suit alleged that the memorandum of understanding signed in June 2005 between Sameh

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Fahmi, the Egyptian Minister of Petrol, and Benyamin Ben Eliezer, the Israeli Minister of Infrastructure, in the presence of Prime Minister Nazif was unconstitutional per Article 151 as well as 14 other articles in the Egyptian Constitution. The constitution stipulated the people’s right to benefit from and to decide the fate of national resources. The suit alleged that the memorandum usurped that right when the prime minister and the Minister of Petrol granted EMG, on behalf of Egypt, the rights to deliver natural gas to Israel for 15 years at the fixed (under-) price of US$ 1.25 per BTU, renewable for another five years after. At the time, the international price had increased to above US$ 12 per BTU. The lawsuit charged that the need for secrecy only became necessary because the ‘deals between businessmen’ entailed blatant ‘dissipation of Egyptian wealth’.129 The above forms of institutional resistance indicate that not all state institutions functioned as an arm of the ruling regime. People and segments therein actively opposed some of the regime’s projects. This resistance also testifies to the continued existence of norms and expectations that are influenced by the nationalist and state-socialist era that predates the transition to the free market. The Mubarak government tried to evade the accusations by claiming that the memorandum was not really a treaty, and therefore was not subject to parliamentary review and approval, and that it was secret because it was between private companies. Critics objected that these semantics contravened the Vienna Convention on the Law of Treaties130 (1969), which Egypt had signed in 1982. They rejected the regime’s first rationale that the sale of natural gas was an original addendum to the Camp David Treaty.131 Nor were oppositionists convinced by the second rationale that the purpose of the deal was to diversify Egypt’s export markets in natural gas. Again, critics like Yusri did not find this argument plausible, considering that natural gas is a commodity that can be traded freely on international markets.132 Once again, Yusri and fellow litigants could not find any ‘national’ reasons for concluding this treaty. Some deduced that, among other things, the rationalisation of an international addendum was a cover for superseding legislative power as well as the sovereignty of the nation (sultat al-sha‘b). Critics further argued that national priorities necessitate that since Egypt is energy poor and oil reserves are not predicted to last for more than 20 years, resources ought to be reserved

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for domestic development not for enabling Israel to develop at lower cost.133 Natural gas could be used domestically to power industries, produce electricity and reduce the size of fuel subsidies, thereby reducing imports in these fields. Many critics such as Gad, Ahmed, Khalil and al-Naggar objected to the sale of Egyptian gas to Israel on principle. They considered it an enemy entity that has usurped, shows aggression towards and occupies Arab lands, using its nuclear and military arsenal to blackmail Arab states, especially Egypt. Gad argued that Washington’s policies in Egypt revolve around Israeli issues, so that the relationship with Egypt experiences ups and downs depending on the current state of Egyptian – Israeli relationship. According to Gad, Israeli interests prevail over US interests in Egypt. He further pointed out that, especially with regard to Israel, American accusations against Egypt are not perceived as problems by Egyptian public opinion but only serve to strengthen support for any government policy to which the US objects.134 Interestingly, even though natural gas was sold cheaply to US allies Jordan, Israel, Spain and Turkey, sales to countries other than Israel did not generate the same level of popular outrage. The reason can be deduced from themes that were prominent in the oppositional discourse, which included the history of wars between Egypt and Israel, the shared socio-cultural and historical experiences and ties with other Arabs, Egypt’s traditional leadership role vis-a`-vis Palestine, the threat/ subordination factor that Israel represented since, unlike Spain, it did and does use force to impose its will and resentment of the US role in facilitating the hijacking of Egyptian patrimonial resources for the enrichment of corrupt leaders and of an enemy state. Once again, the court ruling against the government declared these agreements unconstitutional and thus null and void.135 The court agreed that the treaty dissipated national public wealth and should have been presented openly for public discussion as well as for a vote in parliament. In response, the regime paid no heed, and gas deliveries continued. Critics had little faith that the regime would comply, considering it ‘a government of [arbitrary] decisions’.136 According to Ambassador Yusri, ‘[t]he state does not bother with the law and the Egyptian government practices legal thuggery’. He further specified that ‘the basic law in Egypt is the transgression of laws’.137 Opposition to the sale was motivated by popular rejection of the very concept of selling a strategic

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natural resource to Israel. Yusri and others believed that it went against ‘the natural instinct ( fitra) of the Arab and Egyptian human being’ who had sacrificed in blood, including 100,000 Egyptian ‘martyrs’ in wars against Israel according to official numbers, to protect Egypt and its wealth. He noted ironically that the geographic route of the 1,000-km gas pipeline from el-‘Arish to Ashkelon is the same route that Egyptian soldiers had historically walked and died along during wars with Israel. Adding insult to injury, the military policies of Israel continued to develop its nuclear arsenal ‘to confront us’. Worse, from his perspective, the regime was complicit. As proof, Yusri cited an unprecedented letter of congratulations from Nazif to the private firm, EMG, declaring the deal a ‘success that brings back the age of glory that Egypt is experiencing thanks to the politics of his Excellency the beloved president Husni Mubarak’.138 In terms of discourse, critics used several strategies to attack the natural gas treaty. Legal experts such as al-Sayyed Mustafa Ahmed Abu el-Khayr argued that the agreement was wholly invalid and unconstitutional. They objected to the fact that Egypt had abandoned its position in the Arab world to sell its gas to the Zionists ‘for use against our Arab and Islamic umma’. They also pointed out that the agreement ‘deprives the Egyptian nation from its rights to this gas and from its rights in the natural resources that belong to this nation as per the principle of economic self-determination, which is among the general principles of international law’.139 Some added that Israel’s presence in Palestine is illegitimate to begin with since it is an occupying power. Moreover, they disputed the legitimacy of the peace treaty with Israel, declaring that it did not end the state of war between Egypt and Israel. According to many, the gas treaty was obtained due to the use of force in wars, the last of which was in 1973. As such it is in contravention of Articles 52, 64 and 71 of the Vienna Convention on the Law of Treaties (1969), which prohibits using force to obtain concessions in rights.140 The court ruling echoed some of the arguments used by the litigants. The court agreed that the sale of natural gas cost the Egyptian state/the public wealth (al-mal al-ʽam) US$ 715 million. In its ruling, the court stated that the defendants went beyond and competed to dissipate national treasure, selling it to the enemy before the friend, selling it to an enemy who

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occupied the land, killed the sons, and shamed the women. Not that the price was worth it, for they sold natural gas so cheaply so that it was almost a gift to the enemy.141 The positions of many who had challenged the sale of gas to Israel remained unchanged even after the fall of Mubarak. In fact, the treaty was referred to as the ‘final disaster’ that followed QIZ. The QIZ agreement had previously held the position of the worst since Camp David, a scandal and ‘the Disaster Agreement’.142

Territorial re-imagination and economic normalisation in QIZ and natural gas as successors to the Sinai precedent The two examples of QIZ and natural gas demonstrate links between the newly incorporated re-imagined zones and the United States, since the US was a signatory to both sets of agreements. The examples do not show that US aid was itself used to pressure the regime into signing the agreements. Nevertheless, the aid relationship clearly opened the doors and exerted indirect influence on the direction of policy changes. From the Egyptian side, the aid relationship provided a ready framework with available pretexts, rationalisations and derivative mechanisms that the Mubarak regime used to implement policy normalisations with Israel. The framework of the aid treaty allowed the executive to claim foreign policy as its exclusive domain, especially concerning relations with Israel and the United States. The aid framework thus provided a route for the regime to circumvent and supersede legislative, judicial and popular opposition. The regime had deniability – namely, it had been pressured by the superpower – should the need arise. Both sets of agreements were justified as necessary to satisfy conditions for the ‘full and comprehensive peace’ that is part and parcel of the peace agreement with Israel. Aid not only provided discursive cover, it served as a pretext by which the regime and its affiliated business elite could take advantage of private, international businesses, structures and institutions to side-line resistance to the unpopular relations and deals. They could then reap outsize gains (that is, redistribute wealth and power) domestically by partnering with (normalising) international opportunities. Hussein Salem of EMG, for instance, made billions of dollars from the energy, arms and hospitality industries, frequently in association with Hosni

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Mubarak, since the two often invested together. Salem eventually sold 37 per cent of EMG for US$ 4.2 billion.143 He was convicted of corruption charges after Mubarak was ousted. Similarly, many other officials in the Mubarak government who were intimately involved with privatisation and normalisation, such as former prime ministers ‘Atef ‘Ebeid and Ahmed Nazif, former Minister of Foreign Trade and Investment, Rachid Mohamed Rachid, Minister of Petroleum, Sameh Fahmi, and former Minister of Agriculture, Youssef Wali, were also convicted on various corruption charges.144 In the cases of QIZ and natural gas, partner elite in Egypt made the territorial re-imagining a reality. These partnerships benefited from the symbiosis created by the aid relationship and/or its derivative frameworks. Re-imagined zones of normalised domains and US aid complemented each other and operated strictly within the American frame for Egypt’s role in the region. US aid had populated the State with entities, persons and locales that were structured, economically, territorially and legally, to benefit decision makers who were predisposed to normalising with Israel. The re-imagined normalised sites linked with Israeli and/or American partners, thereby indirectly breaking the Arab boycott. Working with the autocratic Mubarak regime, policies and entities were re-oriented and effectively denationalised/globalised in the process of privatisation. QIZ and natural gas agreements were denationalised in the sense of removing the possibility of wide societal oversight and authority (iqsa’ al shaʽb) as well as of re-orienting goals and reconfiguring prime beneficiaries in favour of private gain. Within these normalised spheres, Egypt acted as a crossroads for Israel to the Arab world. As such, these redrawn zones supplemented strictly USAID funded projects by offering Israel a means to trade with and incorporate within the region while simultaneously increasing Egyptian integration and dependence on American and world markets. The 22 QIZ areas with 717 qualifying companies (in 2008) are a testament to those efforts.145 This pattern of territorial redesign for QIZ and natural gas had a historical precedent in demilitarised Sinai. Sinai was explicitly designated as an empty physical space that was imposed upon Egypt. Post-1973, Sinai was significantly affected – developmentally, politically, socially, militarily and economically – by how the United States visualised the preservation of the regional distribution of power to

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protect Israel. The regime referred to Sinai’s (Egyptian) Bedouin tribes as the ‘Arabs’ of Sinai.146 The peninsula was condensed into an imaginary line separating Egypt from Gaza. Reconfigurations that seek to normalise Israel and/or enclose it behind a protective security zone can be readily observed in Sinai. The stationing of a ‘multinational’ military force – headed by the United States – and the specific injunction to not develop or populate the border reflected a Great Power visualisation of Sinai as empty. Specifically, the multinational US-led policing of the border imposes a coercive hegemonic border, dividing the naturally mixed (Egyptian and Palestinian) people of Rafah. According to both ‘Imad Gad and R.S. Ahmed, the choice between tolerating or destroying intercommunal connections, such as the tunnels that were built to circumvent the illegal blockade of Gaza after 2006, was a negotiating tool for Mubarak.147 Opening or closing them was a calculation intended to impress and/or obtain concessions from the Americans. The tunnel negotiating strategy became increasingly used as the issue of tawrith (bequeathing rule to Gamal Mubarak) loomed. Mubarak therefore used a re-articulated border practice – that enforced an illegal international blockade – on behalf of a US–Israeli vision, regardless of the detrimental economic and social effects on the people in Sinai. In this sense, the Mubarak regime’s territorial practices re-affirmed dominant frameworks even as Mubarak occasionally (and superficially) manipulated them. According to Gad, Sinai holds a place of strategic importance for Israel, if only because it is almost three times as large as Israel and is largely (and intentionally) undeveloped or monitored, and is a potential destination for absorbing disruptions, challenges and growth from Gaza.148 Any development along the border was geared to accommodate and encourage normalising social, economic and political forces. Besides the natural gas pipeline, other forms of normalisation with Israel could diffuse through Sinai via the town of Sharm el-Sheikh. There, links were forged within the framework of peace, diplomacy, tourism and sweetheart land development deals. These links were largely divorced from locals’ needs and autocratically imposed.149 ‘Empty’ Sinai could thus be appropriated by regime-linked client capitalists for (normalisationfriendly) ‘development’.150 Notably ‘empty’ (of resistant Egyptians, who had waged the War of Attrition with Israel), Sinai could be transgressed, but only within the parameters of American policy frameworks (for sustaining the peace).

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The Sinai example has obvious parallels with the later development of normalisation via QIZ and the sale of natural gas. These US-sponsored efforts sought to normalise sites and individuals within geographies of development – QIZ, natural gas and Sinai – as they simultaneously dedevelop others, such as the textile industry at al-Mahalla and the privatisation and dismantlement of public assets like al-Marajil. At the behest of and in cooperation with a complicit ruling elite that operated without democratic procedural controls, the United States and the regime privatised and redirected benefits and profits. After the 1973 war, Sinai, QIZ and natural gas sales to Israel represent diametric re-orientations of prior Nasserite policies that had placed Egypt at the forefront of resistance to Israel and to Western interventionism in the region. Resistant discourses challenged the neoliberal tenets that pervaded regime rhetoric and policies, highlighting that the regime autocratically manoeuvred around popular sentiments to enable the new ‘legal’ appropriation of public wealth, often in the form of encouraging foreign investments and privatisation. The critical and oppositional responses to the premises and details of QIZ and natural gas issues above point ultimately to the fact that the ability to circumvent opposition differs fundamentally from its elimination or incorporation. The US strategic interest in normalising Israel and in aligning the most influential Arab state, Egypt, with American policy objectives needed to overcome opposing popular interests and conceptualisations of the national future. Progress towards the goal of normalisation could not rely on the public spheres in rendering economically dominant interests an acceptable worldview to most. Instead, privatisation was an ingenious improvisation – deployed when geostrategic and geo-economic capital could not change the worldviews of wide, non-beneficiary segments in society. Yet one unintended outcome of privatisation among the ‘private allies’ of US strategy was intra-elite divisions (such as in the Foreign Ministry above, or within the business class, as shown by the survey cited above). It also fragmented institutional structures. As this chapter has detailed, part of challenging US dominance in Egypt involved uncovering and opposing the new, indirect and often private normalised behaviour and activities. Legal means (lawsuits) and activism were pursued by the intellectual opposition, labour and other groups in society against the sale of public assets, natural gas and so

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forth. Challenging dominant narratives by scrutinising official pronouncements and statistics and exposing sweetheart deals was also important. The regime’s version of the national interest in its policies on QIZ and natural gas had problems. Challengers used a comparative framework, juxtaposing benefits to Israel against losses to Egypt, as well as benefits to the US against relatively more meagre benefits to Egypt, to criticise official policies. Thus, the discourse objecting to the sale of natural gas focused on the internal corruption that enabled it and on the disproportionate benefits to Israel, even though the deal included sales to Spain, Turkey and Jordan. The intersection between normalisation and free market transformations like privatisation was a focal point for critics and negatively affected the production of ideological hegemony in alignment with the United States’ vision. Normalisation with Israel was a central pivot around which evaluations of specific economic, geostrategic and political effects of aid and of globalisation turned. It formed the tenet around which the most prominent scandals were structured in the critical discourses about QIZ and natural gas sales. These discourses featured in the type of citizenship, muwatana, that was envisioned, and which built on and updated historically-mediated Egyptian nationalism. In the end, the ‘legal’ (under a free market system) redirection of benefits to partner allies did not produce residuals large enough to convince non-beneficiaries. There were some undeniable positives (such as increased trade); but their maldistribution made it more difficult to convince people that ordinary common interests are best advanced under the official and dominant frame. The historical and intellectual contexts, activism and daily experiences informed the critics cited above, so that, for them, ‘progress’ in certain directions was harmful and contrary to popular sentiment (al-wijdan al-sha‘bi) and to the national interest (al-maslaha al-wataniyya).

CHAPTER 4

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DISCOURSES ON CIVIL SOCIETY, CITIZENSHIP AND NATIONALISM IN THE EMERGING MARKET DEMOCRACY'

Despite the fact that the Egyptian government has been receiving aid for more than 30 years, there is little research that evaluates the aid’s effectiveness in promoting civil society.1 This chapter covers the ‘democracy’ component of the envisioned ‘market democracy’, asking to what extent did the US strategy of partnership and privatization create a foundational social environment that could reproduce the dominant vision as established societal norms. The portion of aid assistance devoted to ‘democracy’ worked alongside market reconfigurations to reinforce a new role for the State vis-a`-vis its citizens, regulating the parameters for citizen engagement in the public sphere within the envisioned US-aligned, globalising and normalisation-friendly state. Just as in the economic sphere, US hegemony in Egypt was imperfect as well as destabilising because societal acceptance of full normalisation as legitimate hinged on the nature of the political regime and the interests of, and envisioned role for, the new partners being created (and incorporated). The need to foster intellectual support and to encourage an amenable civilian sector quickly became apparent. From the beginning, the whole project to reshape intellectual and public perceptions and ideological

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positions had much to contend with. In fact, the fundamental obstacle of intellectual rejection of Israel (and of the repercussions for Egypt from normalisation) emerged only a few weeks after the success of the 1973 war – just as soon as Sadat started talking about peace. It worsened significantly following his trip to Jerusalem and the signing of the Camp David Agreement. This forced Sadat to openly attack intellectuals, putting all critics in jail in September 1981.2 More sophisticated approaches to promoting consent were used by the Mubarak regime. An examination of the emergent articulation of citizenship and of civic engagement through civil society organisations (CSOs) demonstrates that constitutional changes introduced by the Mubarak regime cemented the fundamental shift in the relationship between the State and society. The changed relationship transpired over the course of the aid relationship with the United States. State socialist (Nasserite) commitments were disposed in favour of the free market, enshrining the role of the State as one of honouring contracts and property rights, ensuring security and fighting terrorism. This reorientation defined a different type of link between citizen and state and a different conceptualisation of participation in the public sphere.3 This re-orientation raised (unresolved) tensions within society about the rights, duties and entitlements that constituted the political, socioeconomic, historical and cultural aspects of citizenship,4 concomitant nationalism and the future trajectory of the State. Competing (and transitioning) nationalist visions for Egyptian progress ranged from the ruling vision aligned with US interests and other visions with historically Nasserist and anti-colonial influences. This latter type of nationalism privileged Egypt’s immediate geopolitical historical and normative context and had constituencies among segments in society that were gradually marginalised by the dominant partnerships. The Nasserist and left-leaning discourses discussed below present a vision that is influenced by a historical and ideological alternative to the practices of the US-aligned Mubarak government as well as to the outlook of some segments in the civil society sphere.5 Such individuals are, in varying degrees, part of the superseded segments whose worldviews were under-represented in the re-oriented policies of the ruling regime. These activists, experts and intellectuals did not seek to subscribe to the ‘natural partners’ category targeted by US policy.

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In Gramscian terms, the struggle of leftist and anti-normalisation critics could be described as being along the lines of ‘the war of position’ – that is, a long, primarily cultural and ideological struggle, highlighting political and economic problems with the dominant direction, waged mainly across institutions, the media and in society. While proficient at challenging official policies and interpretations as well as at exposing questionable conduct and problems, their ability to forge political alliances with which to politically challenge the regime was limited. The legal and organisational means of creating social, ideological and institutional support among civil society groups in a ‘reforming/ democratising’ state that would engage in a globalising and normalising peace faced a significant stumbling block in that it was perceived by critics of the regime as purposely using the emancipatory language of democracy to advance a self-serving and obfuscating nonnational agendas.

The debate on the role of civil society: partnerships or challenge? Multiple definitions of civil society exist.6 The common contemporary use of the term refers to an associational sector of voluntary organisations and non-governmental organisations (NGOs), often contrasted with the State and the market. In practical terms, the prevailing approach to civil society is along ‘partnership’ lines. The World Bank, for instance, states that (CSOs) have become ‘important actors for delivery of social services and implementation of other development programmes, as a complement to government action, especially in regions where government presence is weak such as in post-conflict situations’.7 In comparison, the approach of the Mubarak government oscillated. On the one hand, it allowed space for rights and civic organising insofar as these groups played a (junior) partner role in development. The regime thereby alleviated and absorbed pressures arising from the withdrawal of the State from the provision of services and from taking an economically leading role in development. It concomitantly placated domestic and foreign demands for political and social reforms. On the other hand, the regime also viewed civil society with suspicion, as potential challengers and competitors or as agents for foreign agendas.

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In addition to the partner in development conceptualisation, the term civil society has a deeper Gramscian sense, whereby civil society is one of two overlapping spheres in the capitalist state, the other being political society. Herein, civil society is the field in which consent and submission to political rule are developed and sustained by relying on state institutions, ideology, education, intellectual production and so forth. Meanwhile, coercive mechanisms are at the disposal of political society.8 Importantly, this conception of civil society in the public sphere includes trade unions and political parties. The public venues that are used to ‘manufacture consent’ and legitimacy are also potential areas where resistances over ideas and norms may develop, where alternatives to dominant ‘knowledge’ and ‘common sense’ could be advanced (a ‘war of position’ on the ruling dominant group hegemony).9 Gramscian IR interpretations view civil society as possibly defending people against the State and the market or, alternatively, as the terrain of struggle to subvert dominant political systems. The ability of ruling power and state mechanisms to limit their competitors, implicitly by the use of violence, may act as a curb on this struggle. Nevertheless, people are capable of altering their conditions, potentially producing change, especially when the ruling bourgeois class cannot assimilate new elements. Egypt differed markedly from interwar Italy about which Antonio Gramsci theorised. Egypt was neither a democracy10 nor was there a ruling bourgeois class in the strict sense of the term.11 The Egyptian contemporary capitalist class differs since Egypt is transitioning from statist-socialist (and bureaucratic capitalist) towards neoliberal capitalist. In other words, the ruling elite is not the same as the independent, leading and entrepreneurial capitalist bourgeoisie that is assumed in reference to Western developed nations. Historically, the Egyptian capitalist class was closely tied with foreign interests, and it remains so. In contemporary Egypt, this class also included officials in positions of power. These important differences, alongside foreign aid, account for some of the internal contradictions that existed and continue to exist in Egyptian civil society. The fact that American aid was contingent on upholding a particular regional role for Egypt meant that this envisioned role was integrated within the regime’s definition of the general interest, the State’s role vis-a`-vis society and the definition of national priorities. As will be seen in the discussion of the regime-imposed 2007 Constitution below, the

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State’s role changed from socialist partnership with the citizens to ‘fighting terrorism’. Another Article (art. 59) in the constitution switched national duty from protecting socialist gains to protecting the environment. Such re-orientations impacted civil society in general because they manifested a dominant attempt to channel ‘partnerships’ with civil society along primarily free-market developmental and security lines. Significantly, Law 84 (2002) indicates the strategy of building partnerships in civil society by defining the scope and type of citizen engagement with the government through CSOs. These parameters differentially and unintentionally provoked competing nationalist visions. Given the potential for civil society to challenge dominant forces, the idea of ‘strengthening’ civil society thus ought to extend beyond the neoliberal sense of simply building civic organisations and associations that hold governments and markets to account.12 Strengthening civil society must also include the building of civic capacities to solve problems by challenging norms and presenting new ideas and trajectories for the future. Nevertheless, as in the economic sphere, aid donors required that CSOs qualify to donor targets in order to receive funding. This method effectively targeted elite and influenced the direction of aid recipients’ respective efforts in civil society. At the same time, foreign donor funding negatively affected perceptions of the roles that some CSOs perform in society. Foreign-funded civic efforts that aimed at making the peace warm were sharply criticised by other segments of civil society. Al-Nadeem Center for the Management and Rehabilitation of Victims of Violence, for example, published reports criticising normalisation of relations with Israel within civil society. The report suggested that foreign funding of CSOs was provided as political cover with which to disguise detrimental neoliberal economic and normalising transformations.13 For instance, Sana’ al-Masri at al-Nadeem targeted certain aspects of the work of sociologist Saad Eddin Ibrahim at the Ibn Khaldun Center, accusing him of tailoring his language to suit foreign funders and to uphold the status quo. She suggested that foreign funding explains the shift in Ibrahim’s position towards normalising relations with Israel.14 Other examples from the critical discourses provided below show that US aid-related stipulations of warm peace with Israel played a key

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ideological role – in addition to the economic and political ones discussed in the previous chapters – in rendering the ruling regime class incapable of appeasing and retaining growing segments among the traditional constituencies of support for the regime. Such dissent played a central ideological and cultural role in affecting perceptions of and consent to the Mubarak regime and its policies. According to Gramscian theory, the supremacy of the bourgeoisie is built on their economic domination as well as their intellectual and moral leadership.15 On both fronts in Egypt, however, the economic corruption and autocratic associations of US-aid driven economic reforms and normalisation (dis) affected perceptions of the supremacy (and even competence) of the US’s partner elite. Part of the reason is that institutional settings mediate ideological debates and political struggles.16 Fundamentally, the pre-existing Nasserist ideals as well as the geopolitical and historical contexts, reduced the possibility that normalisation would become the societal norm. The fact that the aid-associated transition was away from the socialist-statist model and towards a free market model meant that significant players within the bureaucracy and among the intelligentsia and labour who were part of or allied with the old ruling establishment could not be incorporated. The diversity of the unincorporated groups did not preclude the emergence of critique and contestation of regime policies in cross-networked nodes around common causes. Thus, despite 30 years of official peace, of aid and of market democracy reforms, the US could not procure a warm peace.17 Meanwhile, the regime’s ability to economically and ideologically retain key constituencies deteriorated.

Competing Egyptian discourses on civil society In analysing civil society in Egypt,18 one can view Gramsci’s theory as either providing analytical insight into or, alternatively, as setting reservations against, civil society since many of its organisations are associated with the ruling elite, and hence, may not be autonomous. Egyptian scholarly views differ on this subject. One study by Nanette S. Fahmy holds that political and economic progressive change must come from foreign sources.19 Fahmy contends that the Mubarak regime was a weak authoritarian state whose repressive policies created a weak society. Consequently, she views spontaneous and unorganised efforts in

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communities not as a sign of strength, but as evidence of a weak and fragmented society, impeding government objectives for development. In contrast, Gamal Hamdan views civil society as dependent, arguing that Egypt has a ‘Pharaonic political system’ whereby all change, including in civil society development, comes from the unlimited ruler.20 Another scholar, Hamdy A. Hassan, argued that the Mubarak regime continued its predecessor’s mode of change from above and that this conforms to the Pharaonic political system developed by Hamdan.21 Therefore, the growth of non-governmental society in Egypt was a means to consolidate authoritarianism. Finally, Maha M. Abdelrahman accurately depicts civil society in Egypt as politically contested terrain where authoritarian tendencies exist among its leadership and in organisational operations and decision making.22 Therefore, according to ‘Abdelrahman, these autocratic tendencies undermine the prevalent contention that civil society is the main force for social and political transformation. Historically, voluntary organisations which existed in Egypt may not fit into the (liberal) definition of ‘civil society’ today.23 Aid-dependent outfits and individuals (US partners) were perceived by critics within CSOs as lacking in grassroots support and as conduits for the neoliberal agenda of international policy makers.24 Egyptian anthropologist Suheir Morsy notes that liberal specialised literature on civil society usually assumes that these organisations are benevolently working towards social and political emancipation.25 This perception is the result of an Orwellian rhetorical juxtaposition of CSOs against the autonomous and overbearing ‘state’, denuded of historicised and socialised dimensions. Reality, however, differs. When inquiring into how much the work of CSOs serves to advance an emancipatory and progressive social and political agenda, Maha Abdelrahman’s study demonstrated that the liberal rhetoric often provides cover for work that only superficially alleviates the detrimental political and economic effects of internationally generated policies.26 She concludes that this type of civil society serves to recreate asymmetric power relations. Political scientist Ray Bush reached a similar conclusion in his research on civil society in rural Egypt.27 Bush’s research showed that neoliberal state policies and international donors’ demands for expanding ‘what they call civil society’ have resulted in ‘political de-liberalisation’ that arose with higher unemployment and poverty.

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Examination of the constitutional changes that formalised economic transformations – which were launched under autocratic conditions and with foreign influences – provides a necessary legal context that complicates the above scholarly debate. The dialectical relationships between the donor-influenced and reforming autocratic market-state and citizen constituents, including in civil society organized forms, gave rise to competing discourses about citizenship. Some discourses were informed by historical, societal and institutional tradition, while others were channelled into the emergent foreign-funded and regime-sanctioned transformist project. US policy interest in ‘fighting terrorism’ and in deepening the peace with Israel was transmitted and enacted (via aid) to rulers and state institutions, who then acted as proxies to disseminate these core priorities in their domestic policies and in their relations with citizens. Since general attitudes towards Israel in Egypt were hostile, the US aid framework was forced to rely on private routes and partner allies (sometimes within the public sphere) as the economic, cultural and socio-political analogues of military aid to the regime that had already signed onto the peace. The foreign provenance of some government policies (implemented aid conditions) – as well as autocracy and corruption – impeded the regime’s ability to assimilate new elements or oppositional ideas. While some critiqued US aid as mainly intended to promote US foreign policy goals, others accepted aid as intended to promote ‘democracy’ and strengthen civil society.28 The discourses below highlight that opposition was not to democracy and reforms per se but to: (1) how the US interacted with the regime’s autocratic implementation of reforms; (2) how these processes sustain domination and (3) why the imposition of this type of peace contravened fundamental societal worldviews of a just solution for the Arab–Israeli conflict. These factors negatively affected the United States’ ability to achieve ideological legitimation for its project in the wider society. Perceiving civil society as a separate social space that monitors and balances the domains of state, family and market or, alternatively, as another face of ruling power29 correlated, in Egypt, with one’s disposition towards the functions and aims of international aid. Perspectives also correlated with the types of activities that organisations engaged in. Predictably, for example, most business associations like chambers of commerce had a positive view of aid as well as of the

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government’s drive to liberalise the economy.30 Contrasting and more critical views were held by major intellectuals at think tanks with ideological and historical roots in Egyptian institutions that pre-existed aid and are not foreign-dependent. For example, the prominent Al-Ahram Center for Political and Strategic Studies was established in the Nasser era as an independent research organisation with an original mandate of researching Zionism and Israel. Its work also covers international and strategic issues, developmental issues in Egypt and between Arab countries and regional relations with the international system. Other prominent think tanks with critical views include the Nile Center for Economic and Strategic Studies and the Yafa Center. The dominant ‘partner in development’ narrative (al-tanmiya bi al-musharaka) is adopted by specialists in large human rights NGOs such as the Arab Organization for Human Rights, and in state institutions that focus on how and to what extent civic association, engagement and activism contribute to national development.31 One widely disseminated study linking civil society with national development was the intellectual fruit of an Arab regional symposium held under the auspices of the UNDP in Cairo in June 1999.32 The working paper by Dr Amani Qandil, Executive Director of the Arab Network of Non-Governmental Organizations (Al-Shabaka al-‘Arabiyya li al-Munazzamat al-Ahliyya), framed the debate around the Hegelian dictum that the State creates its own civil society.33 The partner role in development assumes that activities are in association with government and with international organisations.34 This conceptualisation has elements that may conflict with the liberal idealistic assumption that civil society’s role is to challenge the State.35 The ‘partner in development’ theme was increasingly echoed with the advancement of privatisation in some segments within the civilian sector. Concepts of ‘charity’ and ‘social services’ gradually ceded space to concepts of ‘development’ and ‘civilian partnership’.36 From that perspective, Qandil asked what role is available for civil society in the development and direction of the State, given that the central assumptions of democracy and free market economics that underlie theories about NGOs do not obtain in Egypt.37 More serious challenges from civil society were those that harked back to historical principles and/or offered competing interpretations and perceptions of official economic and political information. More socially

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inclusive conceptualisations of the general and national interests built upon Egyptian historical experiences, such as the struggle for independence, and upon social ideals, including Nasserite ideals that survived, even if they were rarely presented in Nasserite ideological terms. In addition to normative objections, negative economic effects provoked alternative definitions of what constituted the general interest. From that perspective, some regime and private outfits were viewed as suspect due to their associations with foreign powers. Prevalent perspectives on civil society assume that it has a voluntary dimension and, frequently, also a grassroots dimension. In Egypt, the assumption of grassroots mobilisation behind ideological positions in political civil society is not always valid and/or expressed. Moreover, the voluntary aspect is not without constraints in Egypt. In some cases, the autonomy of some organisations may be suspect. Aid recipients that were not mere fronts for the government (like GONGOs) were doubly constrained by their need to qualify for aid donor criteria and by the authoritarian and restrictive regime. Even with the best intentions, some tailored their projects to avoid any blatant challenges to dominant economic and foreign policies. For example, the Awlad al-Ard Association for Human Rights was the first NGO to ‘explode a bomb’ in civil society circles when it announced that it was giving up foreign funding because of the ‘subordinating effects of aid on civil society groups and NGOs’.38 Despite potential ‘subordinating effects of aid’, some critics and civil associations had no qualms about rejecting the normalisation of Israel, thereby challenging the premise that there is no autonomy from the State’s ruling neoliberal dominance. A central question for critics was why civilian aid is given by the United States to Egypt. What does the US seek to dominate and by what means? Critics covered below argued that since the answer centred on a ‘comprehensive peace’ within a narrative of stability and development, the scope of the struggle was more clearly defined, rendering aid more subject to challenge. For them, aid was not about Egypt; it was about securing and normalising Israel. The resonance and import of discursive themes as well as activism were dependent on the extent to which some CSOs could set goals via open procedures, surpass particularistic (including ruling and market) interests and focus issues around collective needs, while building upon

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historical preferences. Ideas about how aid affects Egypt were not static, but accommodated changing historical circumstances and the reflexive thoughts of people whose lived experiences cause them to re-assess the effects of alignment with American interests and normalisation.

Internal contradictions of governance: civil society reforms in Egypt Reliance on privatisation as a method of alignment with American interests and normalisation was a victim of its own success. The extent to which aid structured complicit partnerships among power holders, private entities and civil society that could symbiotically benefit from geopolitical and economic opportunities was also the extent to which these spaces were exclusionary and distant from the wider society and prevailing norms. The relationships were often strategically necessary but were economically asymmetric and socio-normatively precarious. As we saw in previous chapters, resources, wealth and power were redirected to those who were amenable to the American view for the region and who would pursue normalisation. They were privatised to the ruling elite and affiliated businessmen or, alternatively, were globalised, benefiting a former enemy, now recast as aid partner. The introduction of aid as an outside resource and its associated relationships produced elite and societal competition, debate and institutional fragmentation – hardly a recipe for ideological and cultural cohesion and adherence to dominant ideas. Meanwhile, the apparent stability of excluded social segments was potentially not consent but submission, and was therefore inherently unstable. In 2000, the US Congress passed the Leahy Amendment, tying US international aid to a recipient country’s record on human rights. The Leahy Amendment did not, however, constitute an impediment to US assistance to Egypt. In 2008, when Saad Eddin Ibrahim asked legislators to use aid as a leverage to force the Mubarak regime to foster more political and media freedoms and an independent judiciary, former US ambassador to Egypt Francis J. Ricciardone Jr called the idea of attaching conditions to aid ‘admirable but not realistic’.39 In 2009, Defense Secretary Robert Gates said that military aid ‘should be without conditions’.40 Despite the fact that Egypt’s human rights record was consistently negative according to State Department Human Rights

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reports,41 the US Embassy in Cairo – and ultimately the State Department – found no evidence against particular individuals.42 An Inspector General Report on the US Embassy stated: The dilemma of how to report human rights abuses in a fair and complete manner that minimizes neither Egypt’s shortcomings nor its efforts and successes, has preoccupied the Embassy for years. Egypt fails to meet criteria stipulated in the guidance for the Department’s annual human rights report, which demands a ‘warts and all’ approach. Yet, Egypt is a key partner in attempting to solve some of the most vexing foreign policy problems facing the United States. It was the first Arab country to sign a peace agreement with Israel, and is still one of only two countries in the Arab world to have done so. It is important to recognize such improvements. The inspectors reviewed the mission’s reporting on human rights from its draft stage to final product, and found it to be a genuine effort to be thorough, fair, accurate and balanced, while upholding US principles and not indulging in excuses for the Egyptian Government. This does not mean that the mission’s perspective is always perfect. The Embassy has been tractable in adopting changes to its drafts when the Department makes a strong case.43 Secretary of State Hillary Clinton waived the certification requirement of the Leahy Amendment.44 The reasons were strategic and also domestic: aid rewards Egypt for maintaining the peace with Israel and it also pays for American corporations’ military–industrial joint projects with Egypt, as well as military equipment sales. The peace entails security dimensions, military cooperation, economic normalisation and political alignment with American interests in line with an American agenda for the region. Importantly, the human rights discourse is used not only by the United States but is echoed in other international forums. These include relations with the United Nations and with the European Union. The EU– Egypt Association Agreements (2006 and 2010) were signed in the wake of the Partnership Agreement with the EU (negotiated from 1995, signed in 2001). Both agreements cite ‘[e]ncouraging regional cooperation to promote peaceful coexistence and economic and political

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stability’ as objectives.45 After 2000 and like the US, EU conditions for aid were tied to progress on rights, democracy and normalisation/peace. There was, however, a major caveat to democracy and rights. The US in particular conflates peace with full normalisation of Israel. Therefore, as seen in the regime’s approach to challenges to the sale of natural gas, any group that objects to the peace in whole or in part – for example, to reforms that might eliminate cooperation or trade with Israel – can be accused of threatening ‘coexistence’, ‘stability’ and social and national progress (towards alignment with American interests). Official accounts of the status of civil society and of human rights in Egypt that were shared with international organisations, such as USAID and the United Nations Development Program (UNDP), both described existing conditions and also recommended specific improvements. Significantly, just as in the market component of market democracy, the principle of governance was the axis around which the UNDP, the Organization for Economic Cooperation and Development (OECD) and the Program for Governance in Arab States formed an organisational cooperative mechanism for civil society engagement to advance development in the Middle East region.46 That approach generally avoided issues of economic rights and of direct challenges to the political system, emphasising compartmentalised issues such as women’s and religious rights. Paralleling the United States’ coordination with Egyptian government institutions to formulate and implement reforms in other fields, the UNDP sponsored interinstitutional dialogue within Egypt, for example, between the various state apparatuses and non-profit and CSOs such as the Ministry of Foreign Affairs, the Prosecutor General, police officers, the Egyptian Organization for Human Rights (EOHR) and the Arab Organization for Human Rights.47 A report submitted by the Foreign Ministry to the UNDP addressed the effects of privatisation on the state of civil society.48 It proposed a partner approach where civil society would bridge the resultant gaps between the individual and public life on the one hand, and between society and the State on the other. The report noted that there are negative repercussions that result from privatisation that might lie beyond the capacity of civil society to address. Vice President of AlAhram Center for Political and Strategic Studies, Muhammad El-Sayyed Sa‘id, submitted that the free market fragmented institutions and the

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societal relationships therein.49 The intense competition led to the cynical utilisation of power in order to prevail in what ought to be social debate based on fundamental shared principles. Society became embroiled in internal competition that consecrates divisions and fostered extremism. Along parallel lines, cherry picking and selective legislation adhered neither to a unifying political ideal nor to advancing a socially activist agenda. Consequently, the maintenance of national security emerged as the only convincing unifying mechanism that could supersede private interests and smooth over societal contradictions. Using pretexts of national security also divided society by political orientation, where opponents were labelled as ‘traitors’ or ‘agents for foreign interests’.50 Ironically, but perhaps not coincidentally given US interest in security and stability, the Ministry of the Interior, like the Ministry of Foreign Affairs, also has a High Committee for Human Rights, which supposedly conducted education activities domestically and coordination activities with sister institutions around the world.51 Sa‘id discerned that democracy did not provide protection. He pointed out that the era of privatisation can accommodate the ascendance of security as the new (ideological) general interest that is reflected in civil legislation and in governmental policies.52 The democratic paradigm does not contain political and intellectual prescriptions. Rather, it mainly protects procedures that sustain democratic choice. This protection was also lacking in Egypt, as the Mubarak regime’s procedural practices did not have democratic credibility. Egypt was, at best, a hybrid. In the civil society sphere, this meant that the regime allowed the establishment of civil groups under restrictive guidelines and was arbitrary in its respect for their rights and freedoms. A brief account of civil society reforms will uncover some of these conflicts arising from the confluence of domestic power distributions and foreign aid. Egypt has almost half of all civil society associations in the Arab world. Their historical antecedents extend back to the early nineteenth century.53 After the revolution of 1952, and for most of the time that Mubarak was president, the legal framework for civil associations in Egypt was governed by Law 33 (1964). Law 33 granted the State very wide powers and ultimate control, including required licencing by the Ministry of Social Affairs. The Ministry also had a right to appoint its

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own representatives on the boards of civil associations and the power to dissolve boards and the associations themselves. Due to internal and external pressure, and after almost a decade of dialogue and debate, the Mubarak regime (unilaterally) wrote the text of a new Law 153 (1999) for civil society. As was the case with QIZ and the natural gas agreements, and with various reforms by the Federation of Egyptian Industries, the new law was not submitted for any real debate in parliament before it was passed. Law 153 was rejected by a large proportion of those specialised organisations and institutions that had been consulted about it. Their input was ignored. Subsequently, it was declared unconstitutional by the High Constitutional Court in 2000 on the basis that it was not debated in the Consultative Council (Majlis alShura).54 The ruling by the court returned the operational management of civil associations to the old Law 33 (1964).55 In stark contrast, business laws that were passed by the regime involved extensive consultations with ‘business society’ that were included in the final texts. Business laws were also excessively permissive, full of loopholes and reliant on the spirit of conciliation.56 Thus, the asymmetrical power of business interests was not balanced in legislation by other forces in civil society. The main objections arising from (most) of CSOs were the following. Law 153 (1999) not only contravened the International Convention on Human Rights, but also represented the government’s propensity to legislate by cherry picking from laws, both Egyptian and international, some of which were obsolete and no longer in use.57 Two controversial features retained the privilege of the State to licence or withhold permits as well as to appoint government representatives on the boards of civil organisations.58 Moreover, this law impeded cross-societal coalitions by prohibiting associations that combined civilian organisations with political parties.59 Cooperation between them would be logical and complementary, since they sometimes shared common demands as well as common membership. The law also prohibited alliances or linkages with any organisations or institutions outside of Egypt. Ironically, the rationale was to prevent contact with Zionist organisations that might be coparticipants in international organisations, conferences and so forth.60 One potential explanation is the regime’s awareness that normalisation was the key to continued US friendship and aid. Therefore, the regime tried to maintain its role as intermediary with the US and Israel by suppressing

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potential competitors. Simultaneously, this posturing by the government appeased constituents who were opposed to normalisation. In addition, there were objections to the growing obstacles that impeded obtaining domestic funding. Seemingly illogically, the military authority (al-hakim al-‘askari) must grant approval before an organisation can seek funding even though the military authority may withhold the very licences required to petition the military in the first place.61 This conundrum led to increased dependence on foreign funding, which in turn risked subordinating these associations to foreign agendas and priorities. Later, in 2002, Law 84 prohibited NGOs from accessing local or foreign financing without government authorisation. Civil society figures were not consulted in the drafting of the final text of that law either.62 According to Sa‘id: Surprisingly, the law was preceded by a meeting held by the Ministry of Social Affairs, in which NGOs and donor institutions had been invited to discuss the draft law. Soon after, the Minister of Social Affairs met with the American Ambassador and the European Union representative in Cairo and urged them, as the biggest funders, to increase donations to NGOs. This request was inconsistent with parliament’s suggestion that foreign funding threatens national security.63 Such semantics served both foreign donors and the regime: the regime appeared to be democratising because NGOs were legalised; but at the same time, NGOs were encouraged into politically compliant agendas. According to parliamentarian and head of the foreign affairs division at the Ahram Center for Political and Strategic Studies ‘Imad Gad, the Ministry of Social Solidarity, the authority in charge of permitting associations, looked the other way about enforcing the law as long as the associations did not challenge the regime.64 Six years later, the pattern described above was repeated. Coinciding with US pressures for political reforms at a time when negotiations over QIZ and natural gas were being finalised, the Mubarak regime, which had been refusing constitutional change from 1981 until 2005, suddenly surprised everyone on 26 February 2005 by asking Parliament and the Consultative Council to amend Article 76 of the Constitution.65 Article

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76 stipulated that the president would be elected by means of a national referendum. This amendment allowed for multiple candidates to run in national presidential elections. Nevertheless, the many restrictions on the candidates and the political parties denuded the amendment of its declared intent. The following year it was re-amended and resubmitted as part of much larger package.66 On 26 December 2006 Mubarak proposed amendments to 34 articles in the constitution. The regime argued that the constitutional changes would enhance the people’s authority (siyadat al-sha‘b), consecrate the concept of citizenship (muwatana), balance powers among the ruling branches of the State, activate political party life and eliminate tendencies to ‘trade in religion’ (al-mutajara bi al-din).67 Again, parliament hastily approved them wholesale, without debate over individual clauses, in March 2007. Critics charged that these changes expanded executive powers by incorporating privileges from the Emergency Law, which had remained in force throughout Mubarak’s rule. The new constitution curtailed civil liberties even more than before. It cancelled judicial control over the voting process. Opponents estimated that only 5 per cent of voters participated in the national referendum. Official estimates were at 27.1 per cent. The vote was boycotted by all opposition parties, including Al-Wafd al-Jadid, Al-Tajammu‘ al-Watani al-Taqadummi al-Wihdawi, al-Hizb al-‘Arabi al-Dimokrati al-Nasseri, and by organisations like Kifaya, many professional syndicates and rights organisations, segments of the student movement, judges and lawyers, the Muslim Brotherhood, the Independent representatives and most of the intelligentsia. The amendments only expressed the views of the ruling National Democratic Party. Overall, the police state was strengthened and the powers of the president were enhanced. Of the 55 articles in the constitution that deal with powers and privileges, the president retained 35 or 63 per cent. The process by which the new amendments were approved was popularly mocked as ‘boiling constitutions and laws’ – a reference to a quick cooking method. The new constitution also led to ‘the Judges’ Revolution’ (thawrat al-quda), in which the Judges’ Club came into direct confrontation with the Ministry of Justice.68 Judges objected to the weakness of judicial supervision over the voting, charging that state institutions were ruled by a ‘culture of fraud’ (thaqafat al-tazwir). In the end, critics felt that there was no

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democratic progress, merely an update of the authoritarian configuration of the political system.69 To some extent, the debate over the constitutional amendments with regard to their impact on democracy in Egypt could be understood as an elite and intellectual exercise. Generally, only 5 per cent of Egyptians are members of political parties, and no more than 25 per cent of Egyptians participate in most elections.70 Nevertheless, the possibility that the debate over constitutional reforms might be politically limited did not diminish its impact on popular awareness, nor did it necessarily mean that Egyptians rejected democracy. Rather, lack of widespread political engagement at the time may have had more to do with weak mobilisation as well as the existence of more pressing priorities having to do with quality of life. A constitution is fundamentally important. It lays out the relationship between the State and its citizenry. Significantly, it also enshrines an economic system that affects rights and responsibilities; ownership of public and private wealth; the roles and entitlements of individuals, institutions and rulers; distribution of wealth from national resources and so forth. In short, a critical look at the constitution is essential to expose the significant socio-economic foundation of the State, as well as the ideological and cultural dimensions of political power. This premise exists in Gramscian approaches and is also echoed in the rational choice school of economics. Specifically, the field of constitutional economics developed by James M. Buchanan Jr, 1986 Nobel Prize winner in Economic Sciences, elaborates a theory of economic decision making based on contractual and constitutional bases.71 Buchanan views the constitution as key to structuring the exchanges and distributions between society and state. His conceptualisation of the State is one where individual members determine the quality of its operation and success. As such, ideally, the constitution ensures transparency, rule of law, effective courts – all necessary elements that strengthen civil society. This approach is important in Egypt, where the constitution was a target of the reform agenda. The constitution of 2007 made the free market changes that had been accumulating since Sadat’s era official. Examination of reactions to the constitution provides insight into measuring the success or failure of the US-induced reforms and transformations to manufacture consent and to become integrated into the common sense of the intelligentsia, in state institutions and in the

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wider public among individual citizens. A look at the discourses and strategies adopted by critics is therefore pivotal in this endeavour.

The free market economic context of the constitution The proposed amendments came in the context of the final stage of economic reforms by the Mubarak regime. Economic reform programmes were initiated without a debate that would build a national consensus over their scope and ramifications. As discussed in previous chapters, the first phase of reforms occurred between 1991 and 1998, under the IMF-sponsored stabilisation programme. Between 1998 and 2004, the US and other donors, in cooperation with the Egyptian government, focused reforms around structuring the trade, legal and institutional frameworks for fuller integration in the US-dominated free market. Egypt signed several trade agreements at that time: the Trade and Investment Framework Agreement with the United States in 1999; a free trade agreement with the Common Market for Eastern and Southern Africa in 2000; the Agadir free trade agreement with Jordan, Morocco and Tunisia in 2004; the EU Association Agreement that came into force in June 2004 and participation in the WTO in 2004.72 After the appointment of the Ahmed Nazif government, new business-friendly laws were introduced. Egypt also signed the QIZ Agreement with the US and Israel in December 2004. In 2005, a free trade agreement with Turkey was signed. Importantly, the pace of privatisation was accelerated so that between mid-2004 and mid-2006, state-owned enterprises (SOEs) and public lands were privatised. As we also saw in Chapter 2, an extensive financial sector reform plan at the end of 2004 resulted in the privatisation of large segments of the banking sector.73 The last set of constitutional amendments officialized the degree to which the Mubarak regime had become aligned into the free market model. In a sense, the amendments were an acknowledgement of current reality, a post facto declaration of aid-assisted economic transformation. In addition, the amendments reflected the rising influence of elite business people in politics. The number of business people in the People’s Assembly grew from 31 out of 350 in 1995 to 77 in 2000. The post-Nazif People’s Assembly included 68 business people. In addition, business people gave substantial grants to the NDP (as donations) in the

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2005 parliamentary elections.74 Regime-linked top business people, including members of the Egyptian Federation of Industries and the USEgypt Business Council (established in 1995), may have been the only segment of the population to have possibly debated with the ruling elite. According to the website of the US –Egypt Business Council, it is ‘the foremost advocacy organisation representing America’s leading companies doing business with Egypt’.75 It consists of senior executives of US companies who are major investors in Egypt. They work with a counterpart Egyptian President’s Council, through bi-annual meetings and seven subcommittees. They ‘partner with organisations working in Egypt to promote council priorities and monitor ongoing economic, legislative and political developments impacting member interests’. Importantly, they ‘conduct policy missions to Egypt to advance members’ priorities in meetings with senior Egyptian officials and business leaders’, including the prime minister and other ministers of finance, trade and industry, investment, petroleum, electricity, energy and communications and information technology. Most other segments of the population were excluded, including the small and medium-sized private sector and members of civil society, labour and agriculturalists. The latter could only react, legally or with activism. In the proposed constitution, the most important economic reformulations were in Articles 4 and 24. The first dealt with the nature of the Egyptian economy and social equity and the second with the role of the State in the economy. In the new formulations, market forces were assigned a major role in the economy while the State role was confined to regulation. The role that was being replaced had reflected a contrasting social contract, with the State allocating resources, managing the economy and providing social welfare services, including employment, health, education and subsidies.76 Some of the amendments indicated the degree to which (Nasser’s) socialism was discarded and re-oriented away from ‘socialist democracy’ towards ‘democracy and citizenship’ (al-dimokratiyya wa al-muwatana). The amendments reflect a conceptualisation of a limited type of citizenship, where active citizen input into the actual practices and state policies is circumscribed. Some of the articles contradicted the principles of equality that normally underlie citizenship: discrimination made candidacy for the presidency difficult (Article 76) and rights and

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freedoms were suspended for the purpose of ‘fighting terrorism’ (Articles 41, 44, 45). Article 161 supported the decentralisation of a previously centralised administrative structure for the State. The new articles were more aligned with free market principles and were committed to the protection of property rights as well as to security and fighting (nondefined) terrorism. Nevertheless, the real economy was more chaotic than the laws would imply. One critic, Rif‘at Sayyed Ahmed, characterised the resultant free market as infitah al-sadah madah, meaning anything goes: the economy is neither state nor market, which creates a class that only seeks to benefit itself.77 Article 6 was retitled from ‘The Socialist Prosecutor General’ to ‘Fighting Terrorism’. Similarly, the old Article 179 that defined the role of the Prosecutor General was exchanged for another that grants constitutional protection to the anti-terrorism law. This change transformed the State role from building socialist partnership to maintaining security. It also granted the President the power to arbitrarily designate who and what institution would prosecute terrorist criminal acts. Article 179 (the Terror Article) stated that: The State shall seek to safeguard public security and discipline to counter dangers of terror. The law shall, under the supervision of the Judiciary, regulate special provisions related to evidence and investigation procedures required to counter those dangers [. . .] The President may refer any terror crime to any judicial body stipulated in the Constitution or the law.78 In other words, it became the President’s prerogative, not the judiciary’s, to assign who gets tried and where – including in military tribunals. The official transformation of the State on to a security footing, one that extends beyond the military dimension and targets and polices the domestic arena, was in line with the United States’ ‘war against terrorism’ and focus on ‘stability’. Assistance in this endeavour came from a special segment in civilian aid – the Nonproliferation, Anti-terrorism, Demining and Related Programs (NADR) account, administered by the US State Department. NADR ‘supports a broad range of US national interests by funding critical, security-related programs’.79 Among other things, NADR funds the Anti-terrorism Assistance (ATA) programme, which, in turn,

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‘provides technical training and equipment to assist foreign countries in protecting facilities, individuals and infrastructure’.80 In parallel, The Counter-Terrorism Engagement programmes ‘build international political will leading to concrete steps in the war on terrorism [. . .]’.81 It is likely that the US was consulted on the drafting of the new antiterrorism law. Among NADR’s objectives is ‘[s]trengthening legal regimes in partner countries’.82 Another is [t]o establish the legal framework, the United States will assist host governments to draft, amend and enact the legal measures necessary to criminalize terrorist financing and money laundering and provide the necessary authorities to develop strong cases in order to prosecute financial crimes.83 NADR considered its work in Egypt a success, as reflected in its favourable performance ratings.84

Discourses on citizenship and civic engagement in the re-oriented state Reactions to the above changes in the constitution were largely negative and provoked critical intellectual debates and legal challenges. Reading the constitution as a social document, many in Egyptian society judged the free market transformations and practices of the government in light of nationalist (historical-cultural) perspectives. These perspectives figured prominently in the leftist and nationalist oppositional discourses on citizenship. Many contested the globalised and normalising definitions of partnership, leadership and citizenship. Within state institutions, the High Constitutional Court’s position on the nature of citizenship is reflected in a legally activist publication put forward in the first days of the revolution in 2011 by Judge Tahani al-Gebali.85 Her essay dealt with citizenship in light of the Second Amendment to the Constitution, which specified Islam as the state religion. She argued that the constitutional framework ought to apply an egalitarian basis of citizenship among all segments of society. This type of citizenship precedes and forms the basis for the democratic republic of the Egyptian state, as set out in the First Article. The court’s conceptualisation, according to al-Gebali, was intended to counter

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successive imperialist divisive projects that sought to reconstruct the nation along sectarian lines.86 Al-Gebali’s essay was intended to contribute to the national and social discourse, some of which proceeded as if Egypt was ‘an umma (nation) without historical memory’.87 Instead, she proposed that discourse should take into account past experiences and stages of struggle. Present discourse is only a stage on a historic journey, segments of which are regressive while others are progressive. She argued that all of the revolutions that had taken place in Egypt – ‘Urabi (1881– 2), 1919 and the Free Officers 1952 – had left their imprint on the constitution.88 At the core is the idea that religion is for God and homeland (watan) is for all – the slogan of the Wafd Party from the 1920s under the leadership of Saʽd Zaghloul89 – with implications for the distribution of resources in the State among citizens. Thus, for the democratic vision to work, the constitution must embody the central unifying vision that is attained by an inclusive societal discourse. The historical cultural accumulations from past intellectual debates – Muhammad ‘Abdu, ‘Ali ‘Abd el-Raziq and Taha Hussein – ought to be sources of openness and moderation in contemporary debates. From this perspective, the phrase ‘Islam is the religion of the state’ indicates a civilisational outlook that goes beyond rituals and encompasses universalistic principles of justice, equality and freedom. Importantly, Islam being the religion of the State practically means that no one part of government (legislative, executive, judicial) can be transformed into a religious power (sulta) – which leaves the constitution and the laws as the one unifying authority (marji‘iyya).90 Judge al-Gebali’s outline of a unifying identitarian conceptualization of citizenship uses a narrative that harks back to an ideal where sectarianism does not and cannot be used by ‘imperialist’ powers to fragment the nation. Similarly, other observers used arguments inspired by extant, but no longer dominant, narratives in order to object to other innovations in the new Constitution. Specifically, the following contrasts between the old and new Constitutions reveal a fundamental economic re-orientation of the State that many found objectionable.91 Article 1 changed the political system from a socialist democracy built on a coalition of the nation’s working forces to a democratic system built on the principle of citizenship. Article 4 redefined the economic fundamentals of Egypt as growing economic activity and social justice,

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guaranteeing all different types of property ownership and preserving the rights of workers. According to constitutional specialist Hussein Tawfiq Ibrahim, the democratic socialist system was built on the principle of adequacy (kifaya) and justice, without exploitation, with the aspiration of narrowing the gaps between incomes; protecting legitimate profit and guaranteeing just distribution of public responsibilities and costs.92 Article 12 dropped socialist behaviour as ideals to be protected by society. Article 24 rendered the state’s role as that of providing the right environment for production and productivity so as to achieve economic and social development. The old constitution had placed the people (al-sha‘b) in control of all means of production, responsible for directing the excesses according to state development plans. Article 30 retained public ownership in the nation-people, but eliminated ‘constant support to the public sector’ and cancelled its leadership role in formulating developmental planning. Instead, the new Article 30 modified the people’s ownership, stating that it was represented by state ownership and legal and corporate personhood.93 Article 33 followed up by protecting ownership rights by law, which was a reduction from the prior elaboration that public ownership was a buttress to the nation’s power, a basis for its socialist system and a source of welfare or luxury (rafahiyya) for the people. Notably, Article 59 switched the nature of national duty, from supporting and protecting socialist gains to protecting the environment. All the above was in addition to the previously mentioned enhancements of the security function of the State. The discourses of respective CSOs, intellectuals and activists developed within the above institutional and legal frameworks. In addition, these discourses interacted with the structures and processes of aid. With respect to mobilisation, the whole process of outreach in Egypt was purposely complicated and disempowering. ‘Imad Gad stated that the regime withheld licencing as a means of disciplining associations (including new church structures). The regime allowed them to operate as long as they were cooperative; otherwise, they risked closure for operating without a licence.94 Similarly, activist Ghada Shahbandar, board member and one of the founders of the Egyptian Organization for Human Rights, an aid-recipient organisation and herself an interlocutor with the US,95 added a further difficulty that exists in the process.

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An organisation must fill out a ten page application and must obtain approval from the EU or some other aid donor. The organisation then applies to the Ministry of Social Solidarity (Wizarat al-Tadamun al-Ijtima‘i) which has sixty days to respond. The Ministry waits until the fifty-ninth day and asks for amendments to the application, which renders the original application to the EU moot. The organisation re-applies again, but by that time, the deadline for application to the EU is past. The project does not go through. Thus, the law is stacked against advocacy work. One could never get authorisation for a town hall type meeting or a big scale questionnaire. The end result is that NGOs end up applying for ‘stupid’ projects that are extremely basic with limited outreach – that have no chance of offending the authorities. Moreover, NGOs are impeded from collecting useful data.96 In contrast, the Ministry’s responses to GONGO applications are different. Relatively new on the civil society scene are organisations devoted to public oversight that raise awareness of endemic corruption in government.97 Prominent among those are the popular movement Shayfeencom (We See You), of which Ghada Shahbandar is a founding member, and Egyptians Against Corruption. Besides the regimelinked organisations, the business sector, composed mostly of medium-sized and small business owners, likewise created their own CSOs. The Association of Businessmen (Jam‘iyyat Rijal al-A‘mal) also adopted a narrative of combating corruption, focusing on the regime’s policies of managing public assets, the methods of selling the public sector and the like. Business and civic associations like Shayfeencom, the Association of Businessmen and the Afro – Egyptian Organization for Human Rights and Development asked for the reconstitution of a ministerial board for privatisation that would ensure transparency and the exposure of all the relevant facts prior to sales.98 Moreover, they asked for a national referendum over the government’s proprivatisation policies: not only in terms of direction but also in terms of scope. They asked how much of public assets ought to be retained as a security anchor for the State to protect against monopolies in the private sector, especially with regard to strategic assets and strategic goods and necessities.99

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From a larger regional perspective, the Egyptian –Lebanese Friendship Society (of business people) and al-Jam‘iyya al-Shar‘iyya were especially active in sending relief aid to Lebanon after the war with Israel in 2006.100 Following that war, a new coalition of NGOs was created, the Egyptian Organization for Humanitarian Relief and Reconstruction (Al-Munazzama al-Misriyya li al-Ighatha al-Insaniyya wa I‘adat alTa’hil). This new organisation accompanied the Egyptian aid flotilla to Gaza. Nonetheless, general participation by civil society outfits in most regional organisations, such as the Euro Med Partnership Conference (the Barcelona Process) in Morocco (2006), focused on free market integration and development, relief and humanitarian work, good governance and rule of law, expanding freedoms while emphasising stability and an emphasis on peace as the strategic priority for regional partnership.101 Overall, according to specialist in civil society at the AlAhram Center, Ayman al-Sayyed ‘Abd el-Wahab, in 2006, 55 per cent of CSOs in the Arab world were charity-based and 22 per cent were services and care oriented, leaving a small proportion devoted to development work and rights.102 Activists and some of the intellectual elite debated whether or not there were good intentions behind US aid. According to Saad Eddin Ibrahim, director of the Ibn Khaldun Center,103 a sub-class within the middle class and business community welcomed aid, wanted more of it and used it to consolidate their political influence. Many NGOs and people like himself wanted ‘imaginative conditional aid’ with a larger democracy promotion dimension. ‘The Americans were manoeuvred to a point where no aid came to any organisation without Egyptian government approval during the last year of the Bush administration and under Obama.’104 Among those NGOs that were approved to receive aid was Susan and Gamal Mubarak’s Jam‘iyyat al-Ri‘aya li alTanmiya al-Mutakamila in Bulaq, Cairo. Ibrahim knew this project intimately because he was Susan Mubarak’s Sociology advisor on her Master’s thesis, ‘Social action research in urban Egypt: a case study of primary school upgrading in Bulaq’, from the American University in Cairo, 1982. Ibrahim asserted that the ‘Americans were aware’ in Congress and in the State Department that this organisation was a GONGO – a front – because he had informed them himself. According to Ibrahim, despite the presence of some allies and sympathisers, overall US policy towards civil society in Egypt was unaffected.105

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The regime charged Ibrahim, along with 27 of the Center’s staff, with defaming Egypt abroad and receiving foreign funds without authorisation. They were convicted. Later, in a well-publicised landmark ruling in 2003, the Court of Cassation voided the conviction and acquitted Ibrahim and all the staff.106 Significantly, while the US intervened with the Mubarak regime on behalf of Ibrahim, it did not do the same on behalf of other political prisoners who oppose US policies in the region (e.g. the invasion of Iraq and normalisation). For instance, one prominent political prisoner who went unmentioned by the United States is Magdi Ahmad Hussein, journalist and editor of the Al-Sha‘b newspaper and current General Secretary of the Labor Party, and his comrades.107 One of the charges of the government against the Ibn Khaldun Center and other CSOs at the time was that they were receiving foreign funding. Ghada Shahbandar remarked ironically that the government itself receives foreign funding, including aid. She added that the government surreptitiously siphoned off aid that was intended for civil associations. Because some of the civil society aid is given per head/ member, the government issued membership cards in the names of various organisations, including her own, the Egyptian Organization for Human Rights. The government was paid by USAID and the EU based on those cards. In response, one organisation, Al-Jam‘iyya al-Misriyya li al-Nuhud bi al-Musharaka al-Mujtama‘iyya, filed a lawsuit (still ongoing at the time of writing) against the government. Shahbandar concluded that the process favours aid, not empowerment.108

Partners in cultural normalisation versus critical debates on national identity The intellectual and practical arena of civil society work under conditions of American aid to Egypt was an especially unstable terrain for ideological struggles. Leftist and other critics of the regime, like Rif‘at Sayyed Ahmed, journalist and head of the Yafa Center for Strategic Studies, viewed cultural forms of normalisation as a means of voiding national identity. According to him, privatised routes of cultural normalisation fragmented citizenship because they denationalised the paths to progress and development, prioritising personal benefits over

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the Egyptian whole.109 By espousing globalisation and normalisation, the ruling elite (including capitalist partners) opened themselves up to intellectual criticism, which focused on elite divergences from historical norms and an aspiration to collective authorship of Egypt’s future objectives. Instead, the imposition of Israel as a friend by some in the elite splintered national vision. Opponents of this direction, like Ahmed, read the acquittal of Sharif al-Filali in 2001 as evidence of the denigration of nationalist norms: Al-Filali was tried for spying for Israel and was acquitted because he admitted spying. The courts ruled the admission was equivalent to an ‘accepted repentance’ (tawba maqbula) – a provocative reason to exonerate him, according to regime critics.110 Ahmed highlighted the importance of ‘occupying the mind’ as a means of domination and as a means of advancing the aid-normalisation project. According to him, intelligence-military work is complemented by cultural and civilian penetration. Specifically, he objected to the work that occurred under the auspices of the Israeli Academic Center (Al-Markaz al-Akadimi al-Isra’ili), which, in cooperation with USAID and the US Embassy in Cairo, funded and published research, hosted events and liaised with intellectual and cultural figures. All of its ambassadors, according to Ahmed, have backgrounds in Israeli intelligence but with scientific credentials.111 One of the largest accomplishments of the Israeli Academic Center was to recruit the well-known author Naguib Mahfouz, who had a history of supporting Sadat’s peace. Thereafter, Mahfouz repeated the refrain that ‘there is no alternative (la badil) to peace’. This was sharply criticised by antinormalisation intellectuals like Galal Amin and Ahmed, who argued that there is always an alternative, especially if the harmful effects of cooperation with Israel are exposed.112 Occasionally an incident of cultural normalisation would be impeded by the regime. In 1995, Ben Gurion University in Israel presented an honorary doctorate to pro-normalisation Egyptian playwright, ‘Ali Salem.113 The Mubarak regime, however, was not yet keen to blatantly propound the cultural aspects of its peace with Israel. It therefore refused to allow Salem to cross at the Taba border checkpoint. Instead, the Mubarak regime preferred to keep public opinion focused on the economic achievements that Egypt derives from peace. In a contrasting example, a CSO with a pro-normalisation stance was granted an operating licence by the Ministry of Social Affairs in

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1998. The Cairo Society for Peace (Jam‘iyyat al-Qahira li-al-Salam) was the only civil society association out of 17 applicants to be approved. The reasons for its unique treatment make sense in light of the regime’s normalising policies. It was established with a capital base of US$ 40 million – whose sources, contrary to normal requirements on official forms, remained unnamed. This society consisted of 30 individuals, mostly businessmen, with two prominent (pro-normalisation) reporters. One reporter became editor of Roz el-Yussef and the other, ‘Abd el-Men‘em Sa‘id, became editor of Al-Ahram and was convicted later of accepting bribes.114 According to the newspaper Jaridat al-Sha‘b, these individuals represented the intellectual dimension of the Copenhagen Coalition, signed in June 1997 with the Mossad and the Jordanians and Egypt ‘to study and research peace and conflict in the Middle East’.115 The society published a number of studies between 1999 and 2002. Suspiciously, from the point of view of critics like Rif‘at Sayyed Ahmed, it never convened a single public event, leading to allegations that members of the society spoke only with each other and that their real power lay in their connections to officials within the state apparatus. Another allegation was that the society sought to target and isolate intellectuals who opposed Israel and were most effective against normalisation.116 Prominent themes in the critical discourses evolved dialectically through quotidian practices and struggles. Debates engaged key government policies that were perceived by critics as being the result of its subordination (taba‘iyya). For Galal Amin, the relationship with the US was even worse than subordination. He quoted Mubarak himself for the more accurate description of the relationship: ‘The one who does not own his food, does not own his will’ (‘man la yamlik ghidha’uhu la yamlik iradatahu’).117 At the most basic level, aid had structured wheat dependence, thereby becoming an instrument of ownership or enslavement, beyond subordination. It enabled the US to impose its will on Egypt. Opportunistically, the regime exploited its subordination, using its position as (subordinate) partner to rationalise extractive, discriminatory, sweetheart (private) deals at the expense of the rest of society, all under the framework of reform. It thus simultaneously (and opportunistically) demonstrated to the Americans and the international financial institutions its seriousness and enthusiasm for the globalisation agenda of the US.118

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Externalities from economic and political reforms were compounded by corruption. In response, critics like those mentioned above, and others like al-Naggar and founding member of both the Labor Party and the Kifaya movement, Kamal Khalil, attacked corruption and specific policies that they perceived as subordination to foreign interests. Even though oppositional discourse exhibited a wide range of positions and ideas, the following binary constructions crystallise the essence of provocative issues. Specifically, important debates addressed peace or submission (salam am istislam); development versus renaissance and social justice (al-tanmiya aw al-nahda wa al-‘adala al-ijtima‘iyya), citizenship versus globalisation (muwatana aw ‘awlama) and reform and/or privatisation (islah wa/aw khaskhasa). These debates challenged dominant frames of control and political practices. Criticisms of American influence and of the regime’s subordinate posture were most resonant when associations with Israel were implicated in regime corruption, maldevelopment and autocracy, both generally and under the guise of fighting terrorism. Prominent opposition writers like el-Naggar, Ahmed, Gad and Amin contrasted negative effects with past historical experiences and the common sociocultural discursive heritage. These critical themes were informed by preexisting realities while evolving with contemporary conditions. Contrary to the dominant aim of normalisation to create a warm peace, the debates demonstrate how Palestine119 and Nasser-era ideals and regional leadership mediated general public perceptions of normalisation, privatisation and the suspect deals that were associated with them. Two prominent Nasserite era officials who are still active critics today are Sami Sharaf, long-time Secretary of Information for President Gamal ‘Abd el-Nasser, who was later jailed by Sadat from 1971–81, and ‘Aziz Sidqi, the first minister of Egypt’s first Ministry of Industry. Sidqi was the main architect of the Nasserite project of industrialisation launched in 1956. Sharaf criticised the Sadat-Mubarak economic model as ‘based on destroying all that Nasser had built for an Arab Renaissance project (nahdawi)’.120 Contemporary policies were unconstitutional, according to Sharaf, because social justice remained a tenet since its enshrinement in the constitution of 1956. He marvelled at the diametrically opposite redefinitions of concepts since Sadat. He asked how the concept of foreign funds, aid and debt provided by imperialist countries are

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miraculously transformed into tools of liberty in a free economic system. How would domestic and foreign capitalists, who had refused to take a leading role in the industrialisation of Egypt, thereby forcing the government to assume that role, suddenly fill the gap? The private sector’s role in investment was equally problematic. Sidqi’s speeches and articles noted that instead of leading development, many had absconded with bank loans.121 Similarly, foreign investments mostly went to already profitable projects. Ultimately, privatisation blocked avenues for development by closing and/or selling numerous successful factories and firms. Three thousand factories were closed by 2002. Incredibly, thanks to the privatisation of Qaha, its chief producer, Egypt now imports its national dish of tinned fava beans ( ful). Thus, according to Sidqi, privatisation is an obstacle to growth, contrary to the claims of the US and the regime, because decreased domestic production expands imports and the trade deficit.122 Sidqi continued that, in contrast to dominant rhetoric, Egypt’s economic history demonstrates that the Egyptian economy grew 6.7 per cent during the 1967 war with Israel and the War of Attrition that followed, despite the lack of income from Suez, the loss of income from petrol in Sinai and the cost of displacing all of the residents of Suez. During that same period, steel, cement and aluminium manufacturing complexes were built, the Aswan Dam was constructed and the armed forces were resupplied. In the discourse of the regime, however, the project of Egyptianising the economy (tamsir al-iqtisad), which started in 1954 and which had made notable progress, had (undeservedly) become the impediment to development.123 Intellectuals such as Gad and Ahmed clearly agreed with the premise of Sidqi’s historical-nationalist discourse, believing that control over awareness, thought and culture (al-wa‘y wa al-fikr wa al-thaqafa) leads to control over all other axes. They perceived Israeli foreign policy as significantly dependent on US help – with Egypt enabling US –Israeli strategic interests.124 A strong perception was that the US insists on opening markets around the world for Israeli products, pressuring countries to establish economic, trade and diplomatic relations with Israel in return for better relations with the United States.125 Another prominent critic, Galal Amin, further noted that, by association, many World Bank projects in the region prioritised the inclusion of Israel to the detriment of possible projects for Arab integration. Thus, oil

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pipelines tended to terminate in Haifa, irrigation channel projects had to reach the Negev desert and investments of capital surplus had to include Israel. Building the first-mentioned would counterweigh the Suez Canal for the passage of oil and constructing the last was prioritised over using Nile waters for land reclamation in Egypt.126 Another important debate ran counter to the very reason for aid provision. It concerned Sinai and challenged the arrangements associated with the US version of peace. Imagining Sinai as empty, the USdominated Multinational Force monitors the international (coercive) enforcement of the border to assure security and the maintenance of the peace. Sinai is 160,000 m2 – almost three times as large as historic Palestine – and has a population of only 350,000. Sinai was ‘returned’ with the peace agreement, but without development. Intellectuals like Ahmed and Gad argued that the imposed ‘demographic vacuum’ enticed extremist movements to move into the space. The government treated the 26 tribes of Sinai as a burden, not as strategic assets.127 The treaty divided Sinai into three parts and treated the peninsula from a security standpoint. Henceforth, the tribes had no right to private land ownership,128 there was no independent economic development and, most importantly, there was no sovereign and effective security presence for Egypt – a necessary precondition to any kind of development.129 Thus, in this constructed vacuum, there were few property rights for the inhabitants, let alone a government role in protecting and developing property rights. Activist opposition to the above arrangements also came from individuals within national state institutions.130 One prominent activist theme and goal centred on the necessity to develop Sinai along resistant lines. For example, Ahmed quoted General Salah ed-Din Khayri Ghneim, a specialist on Sinai, who maintained that it is strategically pivotal to develop the region, especially the areas of the Suez Canal and the canal cities. He argued that development revolving around defensive resistance, not consumption and tourism, would be the most effective defensive strategy with military depth. This type of development is inspired by the defensive resistance of villages during the War of Attrition. In contrast, regime passivity had allowed the Israeli – American plan of ‘assassinating Sinai’ to succeed.131 Ghneim even referred to the US as ‘the enemy’ and accused it of handling spies through its embassy and through the ‘600 civil associations that it

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funds in Egypt’ – supported by Qatar, Saudi Arabia and the states in the ‘American-occupied Gulf’.132 Statements such as the above exhibit how outside actors and the injection of foreign resources into domestic societal struggles may lead to suspicion and dissent within civil society – organisationally, in political strategy and discursively. The discourses are distinct from the narratives that are produced in aid-reliant and privatised (regime- and foreign-dependent) sections of civil society.133 Critics who were not aidrecipients were more likely to emphasise historical and cultural alternatives that remain instructive for a collective vision of the present and future. Moreover, for them, awareness of the contribution of foreign elements to what they perceive as the subjugation of Egypt are at the heart of their discourse. From the American perspective, the use of aid to normalise relations with Israel curtailed the ability to lead the discourses on the economy, foreign policy and how the ensemble of transformations affects the proper roles, right and duties of the State and its citizens. Surviving historical norms and negative effects related to the aid agenda rendered Israel a subject that would easily resonate with a wide public. As seen in the previous chapters, the normalisation issue was used as a thematic axis around which criticisms of general government policies and of the (perceived and actual) effects of US influence in Egypt were articulated. Thus, US strategic interests pertaining to Israel exacerbated pre-existing problems and created new ones in Egypt.

Problems of civil society in Egypt Under international and domestic pressures, the regime delineated the scope of permissible activities and elaborated new roles for the civilian sector. Politically, the growth of civil society can be seen as part of the reformist narrative proclaimed by the government – even if it was hesitant or hypocritical. Noticeable growth occurred around 2005 and was associated with the elections, building political coalitions and monitoring elections. In parallel with global trends, the civilian sector increased its partnership roles with both government and the private sector. Law 84 (2002), known as the Law of Associations and still valid at the time of writing, linked economic growth with a framework for civil society

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activities in development. This law granted government control over the operations and governance of NGOs even as it created a larger space for civic work in the fields of human development and fighting poverty – where the government’s role was retreating.134 In this regard, there were associational projects to encourage economic individual selfsustainability, such as micro-credit provision to combat poverty and unemployment. These efforts manifest free market principles while, at best, only marginally alleviating the problems of unemployment and poverty.135 While Law 84 granted the Ministry of Social Solidarity the authority to intervene in the activities of NGOs and barred foreign funding without the ministry’s approval, the number of civil associations in Egypt increased from 18,600 in 2004 to 21,600 in 2006. Importantly, the law dealt with civil society from a restrictive and punitive perspective – criminalising any activities undertaken before approval by the ministry and instituting criminal, not civil, sanctions for engaging in political or union activities. Consequently, in 2011, only 90 of the associations were concerned with human rights. Due to the lack of either state support or a structurally-supportive environment, it was difficult for civil organisations to make the qualitative jump from charity to development, in other words, to effective engagement and socio-economic empowerment. In fact, there are relatively very few rights advocacy organisations (less than 25 per cent) compared to charities, raising important questions about the contribution of civil society to socio-political development.136 The majority of civil society work was charity-based (that is, not politically-empowering), with most of that newly opened space filled by Coptic and Islamic organisations.137 While charity work expresses social complementarity and perhaps responsibility and solidarity, it does not challenge fundamental causes of maldistribution, poverty and oppression. Moreover, charity work does not contribute to the growth of values like tolerance, freedom, democracy or citizenship. As such, there is a fundamental difference between civil associations and civil society. The work of many charity-oriented civilian organisations shifted towards privatisation and the free markets as the proposed problemsolvers. Micro-loans provided by these charities, while better than nothing, were too small and of limited reach to have any real impact on poverty.138 Researchers like Sherine Gamaledine Ahmed Taha have concluded that the focus by loan providers on profit has in fact hindered

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the ability to alleviate poverty.139 The new approach conveniently coincided with, but could not compensate for, the decline of the State’s macro-structural efforts to redress poverty and unemployment. Fundamentally, reliance on micro-credit signifies a conceptual retreat from traditional expectations and norms regarding social and national solidarity as the drivers of a collective effort for progress. Other problems exist for civil society in Egypt. One effect of privatisation in the field of civil society had produced a new breed of organisations that focus on partnering with the State for development work.140 Some of these organisations, such as Gamal Mubarak’s ECES, were formed with a US$ 10 million endowment from USAID to gather captains of industry who would later assume top government posts.141 Such an organisation was not involved in public, grassroots outreach but instead represented the new breed of capitalist partners whose business interests aligned with international financial institutions and with the United States, and who were sometimes mired in corruption. The United States was not unaware of the risks. According to The Washington Post ‘the arc of the American-backed privatization effort in Egypt recalls years of questions from critics about the transparency and effectiveness of the more than US$ 70 billion in military and economic assistance to that country over the past six decades’.142 Although US officials did not publicly raise questions about the funding to ECES, as the economic think tank is known, they expressed concerns in confidential cables that privatisation efforts could lead to high-level corruption, according to a review of hundreds of WikiLeaks documents by The Washington Post. ‘The privatisation and economic opening of recent years have created new opportunities for “vertical corruption” at upper levels of government affecting state resources’, said one confidential State Department cable written by an unidentified diplomat in 2006.143 The work of these types of privatisation-engendered business associations, and the association of their work with questionable deals such as Gamal Mubarak’s profits trading Egyptian country debt, raised questions among critics about the nature of the contribution that such organisations perform in political and economic development.144 The authoritarian character of the regime limited the motivation for the ruling and business elite to mobilise support among the populace. Meanwhile, the regime’s ability to appease inherited Nasserist constituencies (the bureaucracy and labour) was declining due to the

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redirection of public wealth under the neoliberal and privatising reforms. This avoidance of the need for active citizen participation and mobilisation was dependent on any opposition from the public remaining passive.145 Such passivity, however, was temporary – as demonstrated by the significant increase in labour protests (despite draconian laws) and in criticism among the intelligentsia, by actors within state institutions and in the public and private media.146 On the aid front, since the object of aid to civil society groups was partially intended to promote normalisation at the civic cultural levels, it is particularly notable that cultural normalisation still faced enormous hurdles after decades of aid. For example, Israeli academic Gabriel Rosenbaum criticised Egyptian professional syndicates for acting ‘like a mafia’ – boycotting and intimidating any cultural figures or media personalities who had dealings with Israelis.147 In addition, the activities of the Israeli cultural and academic centre were reduced to teaching Egyptian students Hebrew.148 Also, according to Ehud Yaari, Middle East commentator at Israel’s Channel Two Television and Lafer International Fellow at the pro-Israel Washington Institute for Near East Policy, the cold peace prevailed: On the people-to-people front, Cairo has implemented only limited portions of the eleven normalisation agreements signed in quick succession after the peace treaty, and not as envisaged at the time. For example, cooperation between national radio and television networks came to an end after only one joint program was produced to celebrate the Israeli withdrawal from the Sinai in April 1982. Today, Israeli journalists cannot obtain visas to Egypt, and Egyptian reporters do not come to Israel because of a ban by their union. The Israeli airline El Al has stopped flying to Cairo due to business and security concerns. The Israeli Academic Center in Cairo is still open but mainly serves local students studying Hebrew. And the Egyptian government discourages citizens from seeking the required permit to visit Israel – most of the 15,000 Egyptians now residing in Israel are job-seekers who took advantage of the arrangement allowing them to enter southern Israel at the Taba border crossing without a visa, in the same way that Israelis can visit the hotel strip along the Red Sea coast without obtaining a visa in advance.149

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The seeds of destabilisation grew because while privatisation had reduced the role of government, the onus of maintaining social discursive cohesion increasingly fell on a now fragmented, partly foreign-affiliated and/or -funded civilian sector. Within state institutions (among bureaucrats and extending through their social ties in society), the new emphasis on profit had to compete with a history of national plans for socio-economic equality and solidarity as part and parcel of development. While the work of most civil associations was affirmative and operated within dominant structures, there were notable exceptions. Despite the wide range in the type of resistance, the most resonant objections to the effects of US aid measured and disputed the official narrative when it contradicted ‘common sense’ and local experiences. Critics like Salah Gouda, al-Naggar and Farouk, organisations devoted to exposing corruption such as Shayfeencom and public mobilisation efforts like Egyptians Against Corruption (Masriyyeen Dhidd al-Fasad) disseminated alternative assessments of Egyptian realities based on under-reported data. They published in professional and intellectual journals as well as in newspapers like Jaridat al-Mal, Nahdat Misr and al-Masry al-Youm. Often, resonant themes updated historical discourses by criticising politically- and socially-exclusive state policies that were often more intent on globalisation and normalisation than on addressing domestic concerns. These critiques challenged US and regime leadership while sustaining and growing bases for alternate reformist tendencies that were ideological antidotes to the dominant version. Even though they may have been ideologically and historically grounded so as to resonate in society, this type of oppositional engagement faced regime intimidation. They also faced organisational impediments, frequently of the collective action variety such as free rider problems and grassroots organisational weaknesses.150 Many were not internally democratic and lacked transparency in terms of funding, accountability and decision making.151 In addition, most work by civil organisations was in the fields of research, training and archival information gathering and reporting. In many cases, these types of activities were more theoretical than effective. Shahbandar, at the Egyptian Organization for Human Rights, cited an example that was extensively covered in the press about a USAID-funded effort in the civil

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society arena. USAID had proposed a training workshop for journalists, to be conducted with the help of the American University in Cairo. As was usually the case, USAID insisted that an American expert organisation would handle the event. Because the American organisation had no outreach capabilities to Egyptian journalists, and after a disagreement with the Egyptian side, the workshop was moved to Amman, Jordan. In the end, only three journalists attended the workshop, at a total cost of US$ 300,000. Technically, from the standpoint of USAID, the conclusion of the workshop, now at a wider ‘regional’ level, was a success.152 In other cases, civilian organisations did achieve some success, especially legal victories and media campaigns to disseminate information about state corruption.153 Organisations such as Awlad al-Ard were involved in the above as well as in legal activism. Others, like the Egyptian Organization for Human Rights, monitored and reported violations of human rights such as torture, wrote and published reports and undertook advocacy work on behalf of the disaffected with the regime.154 In general, civil activities were more incremental and reformist than radical. Aid and privatisation compounded these tendencies. The reduction in the role of the State in the civil arena caused by neoliberal reforms was partially addressed via the privatisation (and segmentation) of social services. Privatisation had a double-edged effect, fragmenting opponents of the new direction while populating civil society with organisations that propounded Western-inspired liberal discourse, with its traditional focus on broad individual rights. Oppositions multiplied and splintered along several vectors, exacerbating the problem of producing an organisationally unified, national grassroots resistance.

Unassimilable segments of society and alternative ideas of citizenship As discussed above, civil society is postulated in liberal discourse as different from the State and also from the private sector.155 By contrast, Gramscian methodology interrogates the organic links connecting civil society, the State and the business sector. In Egypt, distinctions between these spheres were not consistently clear-cut. Intellectual production was not limited to the ruling elite. There remained resistant spaces and associations where state power was actively and conceptually challenged.

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The dearth of democratic practices reduced citizen input as well as government accountability. Thus, citizens and civil society were limited in their ability to engage the State effectively and to author the direction of the State’s role, internally, regionally and internationally. Traditionally-nationalist and leftist critics like the ones cited in this book had a deep awareness of Egypt’s historic Arab, Islamic and international roles. Their ideas were derived from past and present experiences: a history of anti-imperialist, anti-colonial, liberation and anti-Zionist struggles. Moreover, the present was characterised by deteriorating economic and quality of life conditions and rising inequality of opportunity and income earning differentials.156 For these critics, Egypt is part of a bigger regional whole of structured interconnections and responsibilities that arise, ipso facto, by virtue of its geographic location. This conceptual and aspirational package is decidedly different from the US’s aid-stipulated normalising role for Egypt. These critics perceived that role as one of assigning Egypt a nonleadership position in the region. Their perspective was unassimilable into dominant discourse (and leadership) because of its non-normalising and, at best in the eyes of the regime, potentially destabilising convictions. As such, the limited ability of the ruling elite to influence this segment of civil society ideologically also limited the regime’s ability to express blatant state alignment with the US vision. An Arab dimension existed within the ideological struggle. Critics cited reasons for opposing normalisation and objected to fundamental concepts that underlie the aid-dependent relationship. Broadly, the very concept of ‘Middle East’ includes Israel and, unlike ‘Arab world’, is perceived by some, like Galal Amin, as an aggressive weapon intended to deconstruct an original, non-ethnically based and unifying identity.157 Amin noted that in 1993, normalisation-friendly Minister of Agriculture Youssef Wali published an article entitled ‘Green Egypt’ in Al-Ahram, in which he called for ‘al-souq al-sharq awsatiyya’ (Middle East market). Wali did not specify its form or scope, only that Israel must be in it. This conceptual market preceded the Gaza–Jericho and Oslo Agreements. Amin added that the analogous economic dimension – the notion of a ‘Middle East market’ or ‘al-souq al-sharq awsatiyya’ – is an alien idea as well as linguistically faulty in its Arabic translation. Materially, too, this market does not exist. In the field of civil society, it competes with Arabism (al-‘uruba). Such competition was observed at

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the 2006 Book Fair, with the regime hosting an Israeli as a guest lecturer, while activists and intellectuals as well as the Egyptian Writers’ Association, including its president Muhammad Salamawi, protested and demanded that the boycott be upheld.158 This anti-normalisation activism had historical and sociological roots, building on the grassroots activism by Al-Haraka al-Jamahiriyya al-‘Amma, which had mobilised exceptional support and played a large role in the early 1980s to prevent an Israeli presence at the Book Fair.159 Subsequent to the publication of an article by pro-normalisation Minister of Agriculture Youssef Wali, in which the formulation of ‘al-souq al-sharq awsatiyya’ was first introduced, the Book Fair entitled one of its panel discussions ‘Are we Arab or Middle Eastern?’ Opponents of normalisation questioned the timing of the introduced concept, arguing that Israel forced this view on Arabs, proposing it prior to the signing of the Gaza–Jericho Agreement, which became the basis for the Oslo Agreement. The idea was later picked up and promoted by friends of Israel. Given the international political background, critics perceived the ‘Middle East market’ as not only a condition enforced on a loser in the war, but a rationalisation to say that it is good for Arabs, who would benefit from Israeli technology and economic cooperation to support peace. Contrary to that claim, economist critics at Al-Ahram Center for Political and Strategic Studies and Galal Amin, as well as intellectuals like Ahmed and Gad noted that in reality, most benefits accrue to Israel since the size of Arab markets (and capital) are collectively so much larger.160 Some perceived aid and US conditions for free market ‘opening’, Infitah-type policies with Israel as opening up Egypt and other Arab states to Israel’s colonial project. They cited as proof that the Camp David treaty insisted on changing educational curricula, which was not a typical request in treaties with other states.161 Normalisation was not normal, according to these critics. Instead, what was natural was to have no relations whatsoever. Critics stressed ‘rational’ reasons, besides the political and historically-nationalist ones, for opposing normalisation: economically, the size of trade with Israel and the economic compatibility between the Egypt and Israel were not significant.162 Coincidentally, Ehud Yaari, Middle East Commentator at Israel’s Channel Two Television, agreed: ‘On the economic front, Israel’s annual volume of trade to Egypt has never exceeded US$ 150 million of exports, mainly chemicals. The two economies are simply not

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complementary’.163 In addition, Egyptian critics challenged dominant ‘rational’ goals by reframing assumptions and re-asserting historical and socio-national goals. Contrary to what proponents of free markets propose, they argued that growth is not more important than distribution and justice.164 Globalisation is not more important than national sovereignty and self-sufficient independence.165 Capital and foreign investments are not always the fastest way to grow, nor the main ingredients for economic growth. These critics linked alignment with American interests with normalisation.166 They disputed the dominant assumption that glossed over resistance to normalisation by attributing rejection of Israel to psychological and cultural factors without historical depth and without addressing the rational reasons of resistance. For instance, they criticised Dar al-Ifta’ at al-Azhar, the highest religious institution, when, at the behest of some NGOs specialising in psychology, it convened two symposia with Israelis, one of which was entitled ‘Islam and Psychological Peace’ (al-islam wa al-salam al-nafsi). Their purpose was to work towards overcoming obstacles to the peace so that there would be more economic cooperation with Israel.167 In short, this type of critique attacked the dominant scientific fac ade that conflated progressive development and reforms with aid-linked strategies that they perceived as re-ordering and subordinating Egypt. Resistance to dominant discourse lay mostly in the non-market arena. Especially after 2005, there was a marked increase in size, frequency and intensity of labour, student and syndical protests. Published reports by Awlad al-Ard indicated a significant rise in collective action protests and strikes by labour in the last five years of the Mubarak regime. Awlad alArd indicated in their 2011 report that the privatisation policies of 2004 were directly responsible for the thousands of demonstrations by workers – and for the regime response of ‘numerous detentions and jail sentences’. It stated that that between 2005 and 2010, 300,000 workers lost their jobs.168 Significant resistance was also found in press and media debates about historical and cultural ‘national fundamentals’ (althawabit al-wataniyya). This discourse was updated to engage with current events and also to conceptualise alternatives and counterfactuals. Some ideas about citizenship embraced Arabness and Palestine. Those inclusive constructions of citizenship were hampered in formal state policies – but not in syndical, labour and professional organisational activism.169 Themes of Arab and worker solidarity were also present in

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the official publications of various oppositional political parties. Activist think tanks with nationalist and Islamic leanings like the Yafa Center coordinated with the Arab Committee to Support Islamic Resistance (al-Lajna al-‘Arabiyya li-Musanadat al-Muqawama al-Islamiyya) to collect and distribute Islamic and Christian religious fatwas and edicts, respectively, forbidding normalisation with Israel.170 Much of that discourse attacked ‘subordination’ in favour of ‘sovereignty’. Amin’s edited collection of articles by Arab intellectuals writing about Israel provides an informative overview of some basic positions that influence interpretations of the US role in Egypt and in the region in general.171 In the opinion of the contributors to this volume, published articles promoting the peace had been used by individuals and states to present the economic aspects of Israel’s conceptualisation of the region’s future. Those ideas disguised Israel’s exploitative strategy. According to Amin, the peace is Orwellian, intended to brainwash Arab minds172 while Israel has been used as a tool of direct intervention by ‘imperialist’ countries173 in the area. The writers conclude that aid to Israel and others allows the United States to use others as proxies. Intellectual critics, like Gad, Ahmed, al-Naggar, Khalil and others, who aspired to a different citizenship experience, were quick to point out that a ‘warm peace’ was not attained at the popular and trade levels in the many years following Camp David. Normalisation was mainly at the political level and involved corrupt individuals.174 They underlined that aid and normalisation became options not because of peace, but rather as a consequence of Israeli aggression. Gad, Ahmed and al-Naggar observed that Camp David, like QIZ and the natural gas treaties, were negotiated at the point of the Israeli gun, where none were subject to citizen input. To them, since inception, the peace has contradicted international law, which has special protections for countries that are occupied (parts of Sinai were occupied until the mid-1980s).175 While these issues went unmentioned in the government’s or the United States’ official discourse, such perceptions nevertheless persisted among this segment of the elite.

Conclusion The processes of aid and privatisation affected citizenship at the level of civic engagement with the State. Without effective citizenship on a wide scale, privatisation had opportunities to create aligned complicit

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interests that could act in spaces where the State used to operate. The strategy of targeting allies and privatisation created a market for particular types of institutional engagement: (1) civic outfits of the developmental partnership type, like ECES, fortified the regime’s economic transformational policies due to overlapping constituencies or access to decision making and (2) civilian engagement was channelled into permissible, officially-condoned or constructed domains like human rights, minority rights and the environment. Private nodes such as the Israeli Academic Center played a coordinating role for integratable research, cultural production, press coverage and so forth. Meanwhile, most civic associations’ lack of engagement with dominant strategic and economic policies and their failure to narratively link those with domestic problems was a product of state autocracy as well as of aid dependence (for funding) among some of the new organisations. The ability to promote effective and politically active citizens and accountable government was limited by the scope of manoeuvrability allowed by autocratic government as well as by the lack of transparency. Furthermore, engagement by CSOs in the processes of political and economic reforms always raised the spectre of funding. If the funding was foreign, then it also raised questions about dependency and the possibility of representing an international agenda. Resistant constituencies in Egypt – labour, intellectuals, Nasserites, activists, socialists, Islamists and leftists – perceived the US and Israel not just as internationally dominant. They were blamed for many historical instances where Egypt had suffered. Normalisation in general, and the natural gas deal in particular, were popularly rejected. Normalising individuals and entities were hounded by accusations of treason. Some critics went so far as to suggest that the growth of normalising policies and deals could not have been possible had there been any sort of democratic transparency and accountability.176 Evolving discourses of opposition among the workers, activists, intellectual and political left and within institutions of the State countered official definitions of progress and peace. These discourses further envisioned an alternative type of citizenship and of its duties, obligations, benefits, roles and responsibilities. Rigorous economic and political analyses were widely disseminated in papers and independent satellite stations.177 Specific, materially-grounded and domesticallyfocused alternatives were suggested to counter some of the negative

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effects that arose from alignment with American interests and of normalisation. They emphasised that despite its problems, especially the failure to institute widespread popular participation, the positive achievements of the Nasserite era have a presence in industry, agriculture, education and the redistribution of income. Nasserite policies made significant progress in building relative economic independence – diversification, industrialisation and growth. At that time, foreign policies were independent and nonaligned; peace with Israel did not mean submission and was contingent on Palestinian achievement of their full rights and non-occupation of any Arab land, including Sinai; liberation movements in the developing world were supported and Egypt led the drive for Arab unity. According to critical intellectuals such as Galal Amin, al-Naggar, Ahmed and Gad, the Sadat and then Mubarak regimes’ rhetoric that misrepresented Nasser’s record was predetermined by the international balance of forces. Global imperialist forces were arrayed against Nasser and beat him in 1967. All those whom he had upset, blamed his failure on Arab nationalism, socialism and/or dictatorship.178 For some critical opponents of normalisation like Amin, the struggle to refocus the national agenda on the real enemy is as difficult and equally as important, as calling for more democracy. Progress on the economic, cultural, educational and social fronts can be made, as the Nasserite experiment showed, without democracy being the necessary condition for success. The former struggle against the imperialist and Zionist powers requires a longer time frame and must be conducted on multiple fronts in addition to democracy.179 Thus, alternative, historically- and socially-based ideas about development, progress, democracy and so forth could not be assimilated by aid and its tool of privatisation. While under Nasser, most intellectuals approved of Egypt’s general direction and role even if they may have disagreed with particular policies; that cohesive vision was no longer true after Sadat’s version of peace was initiated. Such dissonances grew during the latter half of the Mubarak regime, thanks in part to the privatisation and partnership strategy employed by US aid which created privatised, aligned and symbiotically-exclusive spaces whose amenability to normalisation alienated significant sectors in society.

CONCLUSION

Most discussions of US aid to Egypt focus on its geostrategic and military dimensions. This focus is unsurprising considering that the majority of US foreign aid to Egypt is designated for the military. In comparison, economic aid is almost an afterthought, a supplementary instrument devoted to promoting ‘development’, ‘democracy’, and ‘reforms’ - all of which are purportedly intended to garner the good will of the Egyptian people. Even though the economic portion of US aid is only a fraction of the military aid, it nevertheless played a significant role in achieving US foreign policy goals. Economic aid reinforced military and geostrategic goals by promoting a reforms agenda that structured ideological production, economic and institutional transformations, and business and socio-political networks that would advance transnational capital accumulation and that would ensure that Egypt’s future developmental and geopolitical agenda is consistent with US interests in the region. A major feature of US foreign policy interests in the Middle East is Israel. Sustaining and deepening relations between Egypt and Israel while using the ‘peace’ between them as a stepping stone for Israeli economic, cultural and political integration into the region is, therefore, a major component of the US foreign policy agenda. Yet, in the absence of a just solution for the Palestinians, most Egyptians have been and continue to be opposed to a warm peace. The economic aid agenda of free market reforms and ‘democracy’ was partly devoted to overcoming or circumventing this major obstacle. In practice, US aid’s professed objectives of democratisation and economic reform were an ideological justification and political and

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economic misdirection. The stipulation to make the peace with Israel comprehensive – a process known as ‘normalisation’ – affected the processes of economically and structurally re-aligning Egypt. The US and the Mubarak regime used a reforming and democratising narrative to orient the State towards an envisioned stable ‘market democracy’ whose prosperity entailed pursuit of a warm peace where Egypt functioned as a stepping stone for Israeli normalisation with the rest of the region. The transformation of Egypt depended on a dual strategy. By targeting allies for partnerships and promoting privatisation, businesses, territories, civil organisations and institutions were reoriented. This strategy opened avenues for normalised relations with Israel while redirecting benefits towards amenable elites who could exploit their positions to advance crosscutting interests with the United States. Meanwhile, the fact that US aid aimed to maintain geostrategic ‘stability’ – which included sustaining and deepening Egyptian –Israeli relations – meant that narrow economic integration of amenable elites and authoritarian networks and processes would be rewarded for sustaining that stability. Like preaching to the choir, US aid strategy relied mainly on partnerships and privatisation to intermediate the domestic agenda, devoting less effort to convincing the unconvinced. As such, it was narrowly-based and inherently unstable. Domains that were targeted by reforms experienced contradictory effects. Egyptian critical discourses regarding the development of natural gas, the privatisation of public sector enterprises, trade in Qualified International Zones (QIZ) and governance reveal that the strategy’s success in achieving alignment was also its weakness. Dependence on an autocratic elite for the implementation of reforms had the counter-effects of producing sweetheart deals. Many of these deals, while legal from the technical standpoint, were perceived as indicative of a pervasive corruption that was facilitated by the state of flux in economic, legal and administrative institutions during the transition to the free market economy. Because of popular antipathy to the idea of normalisation, redirecting and privatising revenue streams was especially important in enabling the regime to build trade relations with Israel. While efficient and necessary for alignment, the strategy simultaneously undercut dominant efforts to achieve societal consensus over policies for democratisation and reforms undertaken under the mantle of aid. Critical discourses about economic viability, corruption,

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authoritarianism, citizenship, the subversion of the transparency and governance agendas and foreign policy re-alignment reveal why market democracy reforms under Mubarak were problematic and why the peace remained ‘cold’. These discourses also give insight into some of the reasons that contributed to the fall of the Mubarak regime. The process of aligning the interests of Egypt, the US and Israel is complicated by multiple factors. The prior enmity between Egypt and Israel, the complicated history of fighting colonialism and imperialism that Egypt waged and the different political and economic systems are among the most important factors. The first chapter of this book explored the economic background that made economic normalisation possible – arguing that aid’s promotion and use of privatisation created the institutional, territorial and elite bases through which to deconstruct and then reconfigure the State’s role vis-a`-vis society as well as the State’s regional orientation. The second chapter explored the contradictory macro-economic and discursive repercussions that arose from these changes. Chapter 3 explored how these transformations impacted QIZ and the natural gas export treaties. Both issues became discursive triggers and dominated critical debates about not only the execution of privatisation reforms by allied partners, but also the geopolitical redirection of Egypt under American tutelage that, in their opinion, asymmetrically benefited the US and Israel. Alongside of the market reconfigurations, the ‘democracy’ component of the market democracy duo reinforced the new role of the State vis-a`-vis its citizens. Examination of the emergent articulation of citizenship and of civic engagement through civil society organisations demonstrates that the dominant reforms sought to reset the parameters for state–citizen engagement within the envisioned framework of a globalising, and supposedly democratising, normalisation-friendly Egypt. The chapters presented the dynamic evolution of critical debates that contested the political, economic, legal, territorial and ideological dimensions of the aid formula. These debates specifically focused on how free market and democratising reforms were intertwined with achieving a comprehensive, normalising peace. Furthermore, they contested the aid promise that these transformations are key to Egyptian progress. The execution of privatisation via the handiwork of ‘natural partners’ structured economic alignment into the American orbit as well as

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normalisation linkages across borders. Examples from the previous chapters – the Federation of Egyptian Industries, al-Marajil, the military’s economic expansion, Qualified Industrial Zones, natural gas and activities in civil society – demonstrated that some of these relationships were perceived as complicit and/or expropriating by critics who opposed regime policies. The political and administrative elites, sometimes in consultation with some captains of industry business leaders, enacted treaties, contracts and state policies that re-imagined and repositioned the State’s role vis-a`-vis citizens, domestic resources and foreign policies. Privatisation gradually and systematically transformed the purview of prior statist and public national domains into globalised terrain where the Washington Consensus prevailed. Private interests displaced where possible, and circumvented where necessary, the prior nationalist Nasserite Egypt- and Arab-centric entities, ideology and practices.1 National interests were consigned to segments within the elite where business magnates and foreign investors would ostensibly enable Egypt to reach the goals that Nasserism did not deliver. In turn, international, business and political dominant actors would deliver benefits contingent on strict adherence to a full peace. Privatisation was a convenient vehicle by which normalisationfriendly and connected business interests and elites could merge with political interests. The narrative of peace, development and stability that is associated with aid provided the ideological justification under which institutions, laws, trade, investments and so forth were restructured. In so doing, production, trade exchanges and institutional jurisdictions were remapped onto territories where partners could implement policy changes due to their presence at, or their connections with, the apexes of the decision making apparatus. The strategy of targeting elites and privatisation produced USfriendly results – with political dimensions. For instance, the divestiture of state owned enterprises (SOEs) helped align Egypt by weakening the political input of labour in the public sector, facilitating adherence to the recipes of free market globalisation by the regime. Economically, privatisation opened avenues for trade and investments that normalised Israel in the region and circumvented the Arab boycott. Politically and legally, privatisation provided cover for economic opportunism by some in the regime and their allied business partners as well as for normalisation policies. Both were now protected under the sanctity of

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‘private property’. The aid framework had the advantage of structuring a central role for the US in the trilateral relationship: as intermediary, enforcer and buffer (against societal rejection). The strategy of targeting allies and privatisation was less successful in making normalisation with Israel a societal norm. Reliance on business deals, treaties and agreements between autocratic rulers and affiliated segments of the elite to structure alignment with the American project was a self-limiting paradigm. Inherently, this approach circumvented and superseded resistant forces in order to reorient policies. By contravening societal norms and expectations and by not encouraging societal input through political engagement and avoiding public debate – called iqsa’ al-sha‘b (excluding or marginalizing the people/nation) by critics – the strategy could not sufficiently address the reality that an extended social and ideological struggle with Israel persisted among key constituencies. Generally, state historical trajectories, including regional and international interactions and relations, are more fundamentally determined by societies than by rulers. For some critics, the reorientation was perceived as Egyptian subordination (taba‘iyya) in relationships that tie together the US, Israel and a corrupt and authoritarian ruling elite.2 Normalisation through privatisation proceeded despite popular aversion and actions (protests, journalistic expose´s and legal challenges). The preceding chapters demonstrate that regime and policy linkages with normalisation exacerbated the real and perceived negative effects of overall alignment with US interests among regime critics and the general public. Thus, despite aid, US influence was not totalising. Instead of the theoretical prediction of the ruling elite utilising state institutions to manufacture consent of the majority, the ruling elite (and donors) focused on profit as the means by which to manufacture limited and segmented consent (incorporation and alignment). Outside of these circles, the regime’s ability to retain key constituencies was declining due to the retrenchment of the state (neoliberal reforms) in the provision of social services as well as to rising economic and political grievances. The Egyptian case exhibited a significant layer of domestic influence on the direction, type and pace of change. Even the putatively progressive transparency and good governance reforms were employed by power players to hide corruption, now legally camouflaged under the guise of privatisation and investment. For example, the corruption,

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circumvention of the laws and arbitrary conduct involved in the case of natural gas exports to Israel were tolerable and convenient because they advanced a dominant, normalising, free market agenda. Such economically non-viable and politically-motivated trade arrangements associated with normalisation and privatisation dominated debates in critical discourse. Therefore, reliance on the ‘allied partners’ who autocratically controlled power vectors of the State limited the appeal of the US vision (ideological and moral leadership) especially as time progressed. Economically, the private sector did not successfully replace the government’s role in creating jobs or sufficient growth. Reforms that were implemented at the behest of aid donors occurred in cooperation with the autocratic power holders and associated business elite. The fact that free markets were not coupled with free politics resulted in imbalances of power within state-society, opening spaces for corruption. Ideologically, the aid-facilitated merger of the normalisation-friendly segment of the business elite with normalising members of the political elite produced a segmented – not to mention autocratic – elite, thereby undermining their ability to convince and elicit consent. Capitalist partners affiliated with key members in the Mubarak regime sought to displace those among the pre-existing state-bureaucratic-military ruling class who were non-aligned or not amenable to alignment. Moreover, aid’s stipulation of a ‘warm peace’ interjected a geostrategic, foreign goal into the state’s legal, political and economic transition. The existence of this US strategic interest meant that dominant players prioritised instruments that advanced the normalisation dimension of geostrategic incorporation, such as the natural gas treaties and Qualified Industrial Zones. Aid-assisted incorporation of the Egyptian economy into the dominant system was piecemeal, often overlooking transgressions of the international legal, governance and transparency norms that aid donors were purportedly seeking to spread. Instead, the aid strategy achieved its policy aims only by segmenting the institutions of the state and by superseding pockets of resistance. Neither the QIZ nor the natural gas treaties were submitted to parliament for approval, as required by the constitution. The Foreign Ministry was not consulted, where it normally would have been. Instead, key partners in the Ministry of Petrol and in General Intelligence negotiated the natural gas sales. Similarly, the interests of a handful of beneficiaries (textile magnates) in QIZ prevailed

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over the general (capitalist) interest in a free trade agreement. Labour laws were not enforced in QIZ. And legal challenges arising from the suspicious pricing of natural gas sales resulted in court orders to suspend exports but were ignored by the regime (and the US and Israeli partners). The construction of complicit alliances that could execute the dominant economic and geostrategic vision took priority at the cost of discursive engagement with dissenting and often more knowledgeable voices. In other words, this strategy constituted a lost opportunity to ‘manufacture consent’. Some structural transformations were only possible because allied partners could act autocratically and beyond institutional norms. Normalisation was in practice an exceptional (political) arrangement, remaining a dictat and product of material power more than a reflection of intellectual and moral conviction among the wider public. While the State’s role in the provision of social services and infrastructural development was reduced, the state’s role in the sale of public assets and resources expanded. The same denationalising/ globalising process that privatisation produced in state owned enterprises was replicated in disguised and segmented form, by partnering with amenable power holders, in areas that could not be formally privatised, such as in the Ministry of Petrol, the Ministry of Investment and so forth. The autocratic and corrupt underside of the regime and its business and administrative network of supporters operated, thanks to privatisation, in ‘legal’ and conspicuously ‘authoritative’ frameworks. The results dismantled and globalised Egyptian strategic assets and industries. This strategy was evident in the sale of al-Marajil and of natural gas. It was also evident in the QIZ structures, which purposely excluded and disadvantaged older established manufacturing sites (like al-Mahalla al-Kubra) where public and labour preferences to boycott Israel prevailed. The above legalised tools, therefore, exhibited but also hid the redirection of profits and production by free market mechanisms – all in accordance with dominant US interests. Away from trade, the exclusion of the Foreign Ministry and parliament from negotiations over privatised normalisation deals among the government, the Americans and the Israelis represented international, institutional, legal and constitutional supersession of Egyptian law. Unacknowledged by the United States was that this

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strategy procedurally contradicted purported US aims like the institutionalisation of governance and transparency for the purpose of promoting democracy. It circumvented popular preferences, norms and debate – or even (the engineered) parliamentary expression of it. It undermined the expression and perception of the cohesion and authority of the state except in convenient facets of authority, like security and the enforcement of contractual agreements that coincided with international hegemonic goals. It similarly avoided engagement with those who were most affected or most qualified. Instead of consulting those who have jurisdiction – such as the Ministry of Foreign Affairs in the case of natural gas exports – the regime constructed vested interests with those who were most amenable. In short, the strategically convenient approach was a methodological avoidance of potential sites of resistance to the dominant agenda. Inconsistencies that were manifest in the processes of implementing the aid strategy reduced the potential for incorporation of the dominant vision as popular common sense. For example, unlike cases of US complaints about the regime’s record on human rights (gentle slaps on the hand), there were no similar complaints about the nonconstitutional passage of the natural gas or the QIZ treaties. Similarly, while the US (mildly) disapproved of the pace of reforms on the civil society front and objected to the regime’s occasional crackdowns on civil society organisations that receive foreign funding, it never noticed the worse treatment of anti-normalisation activists. These avoidances constituted ways of ‘beheading’ opposition, just as Gramsci predicted in transformist politics. Chapter 4 showed that aid-financed projects, organisations and events that promoted particular types of civil society had to qualify for and, consequently, adhere to, donor agendas in order to receive funding. In addition to working extensively with business associations and government ministries (ironically, to promote civil society), the pattern of international funding and US aid helped civil society organisations that were privately funded and/or staffed by employees, not volunteers.3 Meanwhile, ruling and donor-funded civil society efforts pursued a partnership in development strategy which was intended to help alleviate, but could not fully compensate for, the worst effects of privatisation due to the withdrawal of government services from the state.4 In general, these organisations were advocates for issues that

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fell within the partners in development framework – that is, with no platforms of anti-normalisation. Among those civil society critics who were open to the idea of US assistance, the objection was not that aid was granted but that it was not always used for the benefit of Egypt and Egyptians. Other critics, however, rejected aid outright as an instrument of subordination and perceived that aid was not for Egypt but for Israel. Despite aid, an oppositional narrative persisted. This narrative was conveyed and transmitted by voluntary associations and by intellectuals critical of the regime in the media. It was influenced by the experiences of past revolutions, including the struggle for independence and the Free Officers in 1952. In addition, the critics and activists who were covered in this project frequently appropriated Western benchmarks and reframed them in light of the Egyptian experience. By offering counterfactuals, they challenged the content of dominant ‘knowledge’ and official narratives using local realities and perceptions. This book has exposed some of the contrary outcomes of US transformation strategies in Egypt. It has demonstrated how USfacilitated linkages with Israel created institutions with bifurcated identities and goals. These linkages encouraged normalising entities in the material, territorial and ideological free market of economic, political and civil society and aligned Egypt within the American orbit. Counter-effects of the above were inter- and intra-institutional conflict and confusion, segmented elites and market-determined exclusions of wider society from engagement with various forms of power. It is not hard to see why some re-oriented policies were perceived as being in fundamental conflict with extant norms and expectations held by significant portions of the Egyptian population. These dissonances were significant factors leading to the 25 January Revolution which erupted in 2012 and led to the downfall of Mubarak. Mubarak’s personal role in normalising relations with Israel often went beyond normalisation, so that his regime and allied partners were perceived as actively colluding with Israel to the detriment of Egyptian (and Palestinian) interests. The perception that Mubarak was a stooge, beholden to the US and to Israel, was an especially prominent theme, visible in graffiti, slogans, demands and massive demonstrations that swept Egypt. Most notable among these were the large-scale protests against the Israeli embassy in Dokki and the recurrent attacks on the natural gas pipeline to Israel.

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A common view was that Mubarak was directly serving the United States by collaborating actively on executing its regional agenda.5 A publication by the Egyptian State Information Service covering the reasons for the revolution directly attributes the growing resistance, starting in 2000, to the regime’s role in collaborating with Israel on the siege of Gaza; its continuing adherence to ‘negotiations’ with Israel despite its aggressive assaults on Lebanon, Gaza and Jenin; and its collaboration with the United States in its war against Iraq.6 In fact, the significant rise in social protests and the founding of opposition movements such as Kifaya emerged in reaction to deteriorating socioeconomic conditions and corruption, as well as to Egypt’s deteriorating strategic position after the invasion of Iraq. Contrary to the proAmerican and pro-normalisation conduct of the regime, Egyptian intellectuals and activists in the 1990s, according to prominent journalist and founder of the Kifaya movement Ahmad Baha’ Sha‘ban, were not only preoccupied with the Palestinian issue and Israeli aggression against Palestinians. They also grew increasingly outraged at US aggression against Iraq and felt compelled to expose ‘the terrorist practices of the Anglo–American occupation in that large Arab country’.7 As a result, popular committees were formed in solidarity with the besieged Palestinians and Iraqis (during the sanctions period).8 Despite over 30 years of aid, the ideological splits within state and society over normalisation provide a reason for the failure of the moral and intellectual hegemony of the US to emerge in Egypt. The very premises of the dominant relationship between the US, Egypt and Israel that aid structured were opposed. The preceding chapters covered various types of opposition, from legal challenges to labour activism, protests and demonstrations. Conceptual redefinitions of prominent issues built upon historical and socio-cultural bases in Egyptian society as well as transnational (Arab) dimensions of resistance. As a result, intellectual, media, institutional and political challenges of dominant concepts and narratives and of official and dominant economic information proliferated. Discursive opposition went beyond conceptual proposals by contrasting them to actual economic and political policies and their associated grievances. The dialectic interaction emerged from the juxtaposition that pitted dominant promises against realities. The alternative discourses insisted on protecting public wealth (el-mal el‘am). They placed sovereignty (al-siyada) above subordination (al-

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taba‘iyya). And they fought for the nation’s political and economic rights, acquired through sacrifice, to social wealth. Importantly, there was a discursive keenness that peace (salam) is not submission (istislam), a linguistic and practical distinction that is lifted cleanly from Nasser’s speeches in the 1950s. The last chapter presented the amalgamated effects of marketoriented reforms on the civic sphere where ‘democratization’ reforms were proceeding. It argued that competing conceptualisations of the proper relationship between the state and its citizens were articulated in legal and constitutional redefinitions and redistributions of rights and duties, as well as in divergent nationalist visions for Egypt’s future. These competing ideas ranged from a nationalism that is globalising, free market and US- and regime-supported to another vision that is traditional, historically-informed and socio-culturally-sensitive. In these debates, the normalisation of Israel was often a critical reference point, configuring in the evaluation of specific economic, geostrategic, political and cultural effects of aid. Similarly, these discourses featured in the type of citizenship and political engagement that were envisioned, ranging from globally focused and privately aligned with US policies to domestically focused and consistent with Egypt’s historical leadership role in the region. Ultimately, the achievement of ideological and moral hegemony when the ruling partner elite represented not only itself but foreign actors as well had an inherent limitation. On the positive side, the allied partner and privatising strategy was convenient for the US, the regime and their business and highly-placed bureaucratic allies. The strategy also enhanced the respective roles of the ruling elite as intermediaries for and executors of international dominant strategies. These results are consistent with the Gramscian theory that the dominant project of globalisation seeks to break the centralised state’s ability and desire to speak on behalf of the nation by relying on a transnational class of elite who control state institutions, resources and productivities. The State’s role is preserved but is now internally-penetrated, and redirected to contribute to an international power agenda. On the negative side, however, the method of relying on allied partners magnified the strategic dependence of the US and Israel on these partners to maintain the peace and make it warm. The strategy also meant that these same partners resisted the construction of supportive alliances among the wider society

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and widening the circle of ideological and moral incorporation – that is, achieving Gramscian hegemony. Doing so would entail risks to their (broker) positions in addition to potentially disrupting their economic interests. The lack of democratic checks and of avenues for public input facilitated these dynamics. In sum, the inclusion of a strategic objective in the aid package of economic transformation was a powerful destabilising force. The US introduced a third actor and historic enemy, Israel, into what would usually be a bilateral relationship between aid donor and aid recipient. The injection of foreign resources and a geostrategic agenda into the domestic arena via privatised routes and the absence of a political system with sufficient oversight unsurprisingly degenerated into behaviours that were deemed corrupt and unacceptable by large swaths of society. In the end, the inability to manufacture consent indicates that the dominant tool of privatisation and partnership could not convince most Egyptians that domestic resources were anything but national – in other words, that their development and exploitation could be divorced from primarily national, as distinct from globalizing, goals. The regime’s questionable methods of reform could not overcome critical discourses charging that aid produced anything but subordination (taba‘iyya). Taba‘iyya differed significantly from promises of ‘peace, stability and growth’. Ultimately, even ‘reforming and democratising’ aid efforts could not disguise the subordinating effects of market and political alignment, and thus were not sufficient to elicit a new ‘common sense’.

APPENDIX

Interviewees Kamal ‘Abbas. General Coordinator of the Center for Trade Unions and Workers Services, an activist group of independent unions. Mobilised worker support during the Egyptian revolution of 2011. Activist for more than 20 years, during which time he organised strikes at a Helwan Steel Plant in 1989, leading to his arrest, torture and termination of employment. Charged with defamation (against Mubarak) and sentenced to one year of prison in 2007, which provoked condemnation and defence by international, labour and human rights organisations. Charged again in 2012 for ‘insulting’ a public official. Ahmed Abu Zeid. Assistant Minister of Investment in the Ahmed Nazif government. Rif‘at Sayyed Ahmed. Founder and Chairman, Yafa Center for Strategic Studies. Researcher and journalist, member of the Syndicate for Journalists and writer in Akhbar al-Youm, Al-Ahram, Al-Masry al-Youm, Al-Wafd, al-Ahali, al-Dustour and al-Sha‘b, in addition to Arab newspapers al-Safir and al-Hayat. Hazem el-Beblawi. Economist and politician. Interim Prime Minister of Egypt from 2013 to 2014. Served as Deputy Prime Minister and Minister of Finance in 2011 in the Government of ‘Essam Sharaf, then left four months later in protest over the killing of Coptic Christians

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by security forces. Chairman and Chief Executive of the Export Development Bank (Egypt); Executive Secretary of the United Nations Economic and Social Commission for Western Asia (ESCWA) from 1995 to 2000; advisor at the Arab League Development Fund (Sunduq al-Naqd al-‘Arabi) (Abu Dhabi) and advisor to the Arab Monetary Fund in Abu Dhabi from 2001 to 2011. Beblawi is also the author, with Giacomo Luciani, of The Rentier State (London: Croom Helm, 1987). Mustafa Al-Fiqi. Diplomat and politician among the leading cadres within the ruling National Democratic Party (now defunct) under Hosni Mubarak. Served as Personal Secretary to Hosni Mubarak; member of the Consultative Council for International Politics; Secretary of the Institute for Diplomatic Studies; Egyptian Ambassador to Austria, Ukraine, Slovakia and Slovenia (1995–9); Egyptian representative to the United Nations and the International Energy Agency and in many other posts. Prolific writer and public speaker. Winner of many state awards. ‘Imad Gad. Deputy Director of Al-Ahram Center for Political and Strategic Studies. Editor of the Israeli Digest (Mukhtarat Isra’iliyya), The Arab Strategic Report (annually) and Kurrasat Istratijiyya (Strategic Notebooks). Former chair of the parliamentary bloc for the Egyptian Social Democratic Party (ESDP), from which he resigned in 2014 and joined the Egyptian Liberal Party (Hizb al-Masriyyin al-Ahrar). Hussam Gamal al-Din. Director of Research, Al-Ahram Center for Political and Strategic Studies. Tahani Al-Gebali. The first and only woman judge and vice-president of the Supreme Constitutional Court of Egypt. Member of Hizb alDustour. Elected in 1987 as the first woman member in the Permanent Office of Arab Lawyers since 1944, where she chaired the Women’s Committee as well as the Committee against Racism and Zionism. Served as member of the Arab Council for an Independent Judiciary and as Legal expert at the United Nations and International Trade Arbitrator at the Arab Institute for Human Rights in Tunisia. Winner of many awards, including the United Nations Social Work Medal, Institute for Diplomacy at the Ministry of Foreign Affairs medal and the United Women Progressives medal, among others.

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Saad Eddin Ibrahim. Founder and Chairman, Ibn Khaldun Center for Development Studies. Publisher of Civil Society and Democratization in the Arab World. Founder of the Arab Organization for Human Rights. Member of the Board of Advisors to the Project on Middle East Democracy (an NGO based in Washington, DC). Became a controversial figure in Egypt after he reversed his earlier criticism of Anwar Sadat for signing the peace agreement with Israel. Arrested, imprisoned and prosecuted in 2000 when the Mubarak government accused him of using European Union funds and for ‘defaming’ Egypt’s image abroad. Sentenced to seven years in prison until being cleared of all charges and released by order of the highest civil court in 2003 (after intense international protest). Winner of the Ion Ratiu Democracy Lecture Prize at the Woodrow Wilson International Center for Scholars in 2006. Kamal Khalil. Founder of the Democratic Labor Party and of the Labor and Agricultural Workers Movement Party (Hizb al-Haraka al-‘Ummaliyya wa al-Fallahiyya). Founding member of Kifaya and the inspiration behind the slogans of the January 25 Revolution. Student activist in the 1970s and involved in the Bread Riots of January 1977. Participated in all demonstrations against Israeli participation in the Book Fair. Imprisoned and tortured 20 times by the Mubarak regime for his anti-normalisation and pro-labour activism. Ahmed al-Sayyed al-Naggar. Chairman of Al-Ahram (2014– ) and Director of Economic Studies at Al-Ahram Center for Political and Strategic Studies. Editor of the Strategic Economic Trends report for 2000 and 2006 and of the Arab Strategic Report. Member of the Syndicate of Journalists and elected representative for journalists at the Al-Ahram Organization. Imprisoned and then released by both Sadat and Mubarak. Winner of the ‘First Fighter against Corruption’ Prize in 2006 by the Egyptian –African Organization for Human Rights and Shayfeenkom. Winner of the State Encouragement Prize in Economics (1996), granted by the High Cultural Council at the Ministry of Culture. First prize winner in 1989 of Best Analytical Article, granted by the Syndicate of Journalists. Ghada Shahbandar. Activist and Board member of the Egyptian Organization for Human Rights. Founding member of Shayfeencom.

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Dina Shehata. Senior Researcher and External Relations and Grants Officer at Al-Ahram Center for Political and Strategic Studies. Special Advisor to the Muslim World Initiative, United States Institute of Peace. Ikram Youssef. Economic journalist, al-Shurouk, activist. Imprisoned with Khalil Kamal many times over the years.

NOTES

Introduction 1. President Bill Clinton spoke of freedom being ‘on the march’ as opposed to ‘the cynical calculus of pure power politics [which] simply does not compute’. ‘The 1992 campaign; excerpts from speech by Clinton on US role’, New York Times, 2 October 1992. Available at http://www.nytimes.com/1992/10/02/us/ the-1992-campaign-excerpts-from-speech-by-clinton-on-us-role.html. Later, Secretary of State in President George W. Bush’s cabinet Condoleezza Rice spoke of the powers of ‘transformational democracy’ which consisted of institutionalisation, democracy promotion and free markets. Rice, ‘Transformational diplomacy’, Georgetown University, 18 January 2006. Available at http://2001-2009.state.gov/secretary/rm/2006/59306.htm (both accessed 12 May 2014). 2. Stephen M. Walt, ‘The bad old days are back’, Foreign Policy, 2 May 2014. Available at http://www.foreignpolicy.com/articles/2014/05/02/the_bad_old_ days_are_back_china_us_russia_power_politics_realism (accessed 11 May 2014). 3. John Mearsheimer, The Tragedy of Great Power Politics (New York, W.W. Norton & Company, 2001). 4. Christopher Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present (Ithaca, NY, Cornell University Press, 2006), p. 33. 5. The pricing of oil in dollars is central to the sustenance and smooth operations of global relationships (see Timothy Mitchell, ‘Carbon democracy’, Economy and Society 38/3 (August 2009, pp. 399– 432; John Agnew, ‘Sovereignty regimes: territoriality and state authority in contemporary world politics’, Annals of the Association of American Geographers 952 (June 2005), pp. 437 –61); David E. Spiro, The Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets (Ithaca, NY, Cornell University Press)). 6. Neoliberalism is a broad topic, generally referring to a complex interplay of local and external forces acting within the global political economy. Originally

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theorised by Friedrich von Hayek and developed into its contemporary form at the University of Chicago’s School of Economics, its principal tenet is that the market is valued in and for itself, and is the structure that can guide human action. The doctrines of neoliberalism have spread around the world via the United Nations (UN) and its related financial institutions like the International Monetary Fund (IMF) and the World Bank, as well as via treaties like the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA). Neoliberal reforms are a central demand by the United States of the rest of the world – most notably during the Asian financial crisis. According to Richard Robison, neoliberalism separates economics from politics, prescribing a preference for a specific social and political order that depoliticises policy making; simultaneously, it relies on heightened exposure to economic insecurity in order to sustain the operations and profits that are asymmetrically produced, extracted and directed. Even though the term neoliberalism is used interchangeably with globalisation, neoliberalism relies on the nation state to effect capital accumulation. Richard Robinson, ‘Neoliberalism and the future world: markets and the end of politics’, Critical Asian Studies 36 (2004), pp. 405– 23. 7. Chalmers Johnson, Nemesis: The Last Days of the American Republic (New York, Metropolitan Books, 2006). 8. Views of the role, function and effectiveness of foreign aid differ. Anne Mariel Peters lauded the ability of the Nazif government to implement economic reforms (Anne Mariel Peters, ‘Whither Egypt’s economic reform?’, Carnegie Endowment for International Peace, 7 July 2009. Available at http:// carnegieendowment.org/sada/index.cfm?fa¼ show&article ¼ 23360&solr_ hilite ¼ (accessed 1 February 2014)). David Bierce’s assessment of foreign aid showed that it is negatively correlated with democracy because more authoritarian systems enable the more efficient passage of ‘economic reforms’ (David H. Bearce, ‘Why foreign aid may be less effective at promoting economic growth in more democratic countries’, paper presented at the annual meeting of the ISA’s 50th Annual Convention Exploring the Past, Anticipating the Future, New York Marriott Marquis, New York, 15 February 2009. Available at http ://citation.allacademic.com/meta/p311285_index.html (accessed 1 February 2014)). Other research posits that failures of foreign aid are the responsibility of recipients. See Anne Mariel Peters, ‘Foreign aid and the primacy of coalition politics’, Special Relationships, Dollars, and Development: US Foreign Aid and State-Building in Egypt, Jordan, South Korea, and Taiwan, presented to The Center for Global Development, Washington, DC, 20 February 2009. Available at http://www.cgdev.org/doc/events/2.20.09/Peters_CGD_Pres entation.pdf (accessed 1 February 2014). See also Craig Burnside and David Dollar, ‘Aid, policies, and growth’, American Economic Review 90/4 (September 2000), pp. 847– 68. Other works show that institutional and economic progress are frequently sacrificed to maintain the stability of domestic political partners: Alfred Maizels and Machiko K. Nissanke, ‘Motivations for aid to

NOTES

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10. 11.

12.

13. 14.

15.

16.

17.

18.

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developing countries’, World Development 12/9 (1984), pp. 879 – 900; William N. Trumbull and Howard J. Wall, ‘Estimating aid allocation criteria with panel data’, Economic Journal 104/425 (1994), pp. 876 – 82; Alberto Alesina and David Dollar, ‘Who gives foreign aid to whom and why?’, Journal of Economic Growth 5 (March 2000), pp. 33– 63 and David Bearce and Daniel Tirone, ‘Foreign aid effectiveness and the strategic goals of donor governments’, The Journal of Politics 72/3 (2010), pp. 837 – 51. Joseph S. Nye Jr, Soft Power: The Means to Success in World Politics (New York, Public Affairs, 2004) and ‘Transformational leadership and US grand strategy’, Foreign Affairs 85/4 (July– August 2006), pp. 139– 45, 147 – 8. For more on how crucial the pricing of oil in dollars is to the United States, see Mitchell, ‘Carbon democracy’. A 2009 audit by the US Inspector General of USAID’s Democracy and Governance activities in Egypt explicitly states the rationality underlying aid: ‘The US Government works strategically with the Government of Egypt to promote peace and regional stability, counter extremism and terrorism, and create an environment conducive to economic reforms.’ Jacqueline Bell, Regional Inspector General/Cairo, ‘Audit of USAID/Egypt’s Democracy and Governance Activities (Audit Report No. 6-263-10-001-P)’, 27 October 2009, p. 1. Available at http://usatoday30.usatoday.com/news/pdf/usaidaudit. pdf (accessed 19 January 2015). Jeremy M. Sharp, ‘CRS Issue Brief for Congress: Egypt-United States relations’, Congressional Research Service, Library of Congress: 15 February 2005, pp. 3, 5. Available at http://www.au.af.mil/au/awc/awcgate/crs/ib93087.pdf (accessed 1 February 2014). Ibid. Juan Cole, ‘Top ten ways Egypt actually does deeply matter to the United States’, Informed Comment, 18 July 2013. Available at http://www.juancole. com/2013/07/actually-matter-united.html (accessed 18 November 2014). Dan Merica, ‘Obama: US aid to Egypt no longer “business as usual”’, CNN, 23 August 2013. Available at http://politicalticker.blogs.cnn.com/2013/08/23/ obama-u-s-aid-to-egypt-no-longer-business-as-usual/ (accessed 18 November 2014). Al-‘Arabiya, ‘US official: Egypt’s stability important for America’s national security’, Al-‘Arabiya, 4 July 2013. Available at http://english.alarabiya.net/ en/News/world/2013/07/04/Egypt-s-stability-important-for-U-S-nationalsecurity-official-tells-Al-Arabiya.html (accessed 18 November 2014). Jim Michaels, ‘US military needs Egypt for access to critical area’, USA Today, 17 August 2013. Available at http://www.usatoday.com/story/news/world/ 2013/08/17/egypt-morsi-obama-hagel-gulf-heritage-brookings/2665903/ (accessed 18 November 2014). Xinhua, ‘Egypt lures investors to develop Suez Canal Zone’, Sina English, 13 May 2013. Available at http://english.sina.com/world/2013/0513/590123. html (accessed 18 November 2014).

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19. ‘Hegemony’ is used by Gramsci in two ways, both of which are aims of US policies in the Middle East. First, hegemony is contrasted with domination and is intertwined with the State and civil society. Second, ‘hegemonic’ is the opposite of ‘corporate’ or ‘economic-corporate’, meaning that hegemonic is a historical phase during which an economic group aspires to a position of leadership in political and social arenas. Gramscian hegemony entails using institutions and structured socio-economic relations as sites for legitimising dominance. Hegemony in civil society (by intellectuals, relations and organisations) supplements the direct command and coercive work of political society (the State). The dominant class then becomes a historic bloc. Antonio Gramsci, Selections from the Prison Notebooks [1971], ed. and trans. Quintin Hoare and Geoffrey Nowell Smith (New York, International Publishers, 2010), pp. 160, 169). In international relations, Gramscian IR theorists argue that globalisation allows the construction of a transnational historical bloc. 20. Calculations based on statistics from the IMF 2011 World Economic Outlook and from US State Department. 21. See USAID Foreign Assistance Database (FADB), ‘Disbursements by sector & implementing partners, 2000– 2010’, USAID Economic Analysis and Data Services, 4 January 2012. Available at http://gbk.eads.usaidallnet.gov (accessed 1 February 2014). 22. Measurable negative effects on the Egyptian economy do not make headlines for good reason. For instance, in Egypt, the difference between gross domestic product (GDP) – which is reported widely – and gross national product (GNP) – which is not – is enormous and revealing. GNP measures all goods and services produced in Egypt whether its producers are local or foreign. GDP, on the other hand, takes GNP, adds the estimated value of goods by Egyptian firms outside of Egypt plus remittances and subtracts the value of goods produced by foreign entities domestically. To get an accurate picture, GNP must be adjusted by a deflator to make up for differences in purchasing power parity (PPP) with the rest of the world. The difference between them is foreign capital exiting Egypt. In 2010, that difference was equivalent to more than 17 per cent of national production; in 2009 it was more than 14 per cent. In contrast, foreign direct investment (FDI) only represented on average 40 per cent of the monies extracted from Egypt. Most of these FDIs were actually exchanges in paper assets and not real investments, constructing new physical productive assets on the ground. Ahmed al-Sayyed al-Naggar, Al-Inhiyar al-Iqtisadi fi ‘Asr Mubarak: Haqa’iq al-Fasad wa al-Batala wa al-Ghala’ wa al-Rukoud wa al-Duyoun (Cairo, Al-Majlis al-A‘la li al-Thaqafa, 2012). From the perspective of international neoliberal capitalism, it is therefore telling that neither the World Bank nor the IMF report GNP. 23. The Guardian, ‘Scene setter for General Schwartz’, cable classified by US Ambassador Margaret Scobey, dated 31 March 2009, 28 January 2011. Available at http://www.theguardian.com/world/us-embassy-cables-docu ments/199866 (accessed 1 February 2014).

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24. Article III; policies elaborated in Annex III. 25. See http://transition.usaid.gov/our_work/merc/success_stories.html (accessed 1 February 2014). 26. See for example Senior Fellow in Foreign Policy at the Brookings Institution Robert Kagan, ‘Why the world needs America’, The Wall Street Journal, 11 February 2012. Available at http://online.wsj.com/article/SB100014240529 70203646004577213262856669448.html (accessed 1 February 2014). The United States and the ‘free world’ (read Europe) dominate and spearhead this project. 27. For literature on aid to Egypt, see Gouda Abdel Khalek, ‘Foreign economic aid and income distribution in Egypt: 1952–1977’, in Gouda Abdel Khalek and Robert Tignor (eds), The Political Economy of Income Distribution in Egypt (New York, Holmes and Meier Publishers, 1982), pp. 435–68; Abdel Karim Bangura, The Effects of American Foreign Aid to Egypt, 1957–1987 (New York, Mellen University Press, 1995); Heba Handoussa, ‘Fifteen years of US aid to Egypt: a critical review’, in Ibrahim Oweiss (ed.), The Political Economy of Contemporary Egypt (Washington, DC, Center for Contemporary Arab Studies, 1990); The American University in Cairo, ‘Whither economic aid to Egypt?’, 23 September 2012. Available at http://www.aucegypt.edu/GAPP/casar/Pages/WhitherEconomic-Aid-to-Egypt.aspx (accessed 18 January 2015). Most studies on aid do not examine the function of economic aid in producing normalisation. One exception is the 1985 study by anthropologist, Suheir A. Morsy, in which she argued that aid is part of the changing face of imperialism and is an American instrument to subjugate and control Egypt. She links aid to Zionist interests, economic and cultural hegemony and autocratic legislation. Soheir A. Morsy, American Aid to Egypt: A Special Case for a General Politics (Al-Muwajaha, Lajnat al-Difa‘ ‘an al-Thaqafa al-Qawmiyya, Cairo, 1985). Morsy’s excellent work does not address: (1) more recent developments in the aid relationship; (2) the tool of privatisation in aid and in normalisation; (3) negative economic effects from normalisation and (4) the dialectical emergence of opposition. 28. Interview with Larry Diamond by Jonathan Masters, ‘Democracy promotion and the Obama doctrine’, Council on Foreign Relations, 8 April 2011. Available at http://www.cfr.org/us-strategy-and-politics/democracy-promotion-obamadoctrine/p24621 (accessed 1 February 2014). 29. Walid Salem, ‘The anti-normalization discourse in the context of IsraeliPalestinian peace-building’, Palestine-Israel Journal of Politics, Economics, and Culture – Civil Society 12/1 (2005). Available at http://www.pij.org/details.p hp?id¼334 (accessed 2 February 2014). 30. Ibrahim Nawwar, ‘Al-‘Ilaqat al-Misriyya al-Isra’iliyya: al-Itar, wa al-nata’ij, ba‘d ‘am min al-tatbi‘’, Al-Ahram, 1 July 1981. Available at http://digital. ahram.org.eg/articles.aspx?Serial¼ 215095&eid ¼ 13 (accessed 2 February 2014). 31. Rif‘at Sayyed Ahmed, ‘Dr. Rif‘at Sayyed Ahmed yaktub: Hasad thalatheen ‘aman min al-tatbi‘ ma‘a Isra’il’, 18 December 2009, Youm7. Available at http://

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www.youm7.com/News.asp?NewsID¼167282&SecID ¼ 230&IssueID ¼ 0#. Uu7d7j1dWSo (accessed 2 February 2014). 32. Definition of ‘normalisation’ by the boycott, divestment and sanctions movement (BDS). Palestinian Campaign for the Academic and Cultural Boycott of Israel (PACBI), ‘Israel’s exceptionalism: normalizing the abnormal’, 31 October 2011. Available at http://www.pacbi.org/etemplate.php?id¼1749 (accessed 2 February 2014). 33. Procedural and institutional pluralist democratic politics is a method of overcoming the ‘sovereignty paradox’: the inherent contradiction between the will of the majority and unequal economic distributions in a state-society. Theoretically, institutional pluralist democracy stabilises socio-economic distributions and results in more stable politics that converge towards the centre. Democracy promotion, part of the rationale behind US civilian and economic aid, advocates procedural pluralist democracy. It seeks to construct shared values and concepts, structures and procedures that channel mass popular demands arising from the socio-economic arena and that keep them separate from the political sphere. Joseph Schumpeter argued that mass democracy has rendered popular sovereignty inadequate. Henceforth, political parties aggregate preferences and people’s politics consist in either rejecting or accepting their leaders in competitive electoral processes. Joseph Schumpeter, Capitalism, Socialism, and Democracy [1942], 2nd edn (New York, Harper and Brothers, 1947). Joseph Nye added soft power rationality as a complement to institutional pluralism (Nye, Soft Power). In addition, Adam Przeworski argued that diverse political interests are aggregated and are presumed to have an equal chance of success in a presumably neutral set of state procedures and institutions. (Adam Przeworski ‘Conquered or granted? A history of suffrage extensions’, British Journal of Political Science 39/2 (April 2009), pp. 291 – 321) and Przeworski, Limongi Neto and Fernando Papaterra, ‘Modernization: theories and facts’, World Politics 49/2 (January 1997), pp. 155 – 83).) Gramscian International Relations theorists emphasise that the contemporary misnomers of globalisation and free markets, both promoted by US aid, obscure that institution-focused liberal democracy promotion in the nonWest, as well as universalist-type claims of human rights and of economic liberty serve a dominating role that guides geostrategic and market Great Power agendas. (Naeem ‘Inayatullah and David L. Blaney, ‘Realizing sovereignty’, Review of International Studies 21/1 (1995), pp. 3 – 20; William I. Robinson, Promoting Polyarchy: Globalization, US Intervention, and Hegemony (Cambridge, Cambridge University Press, 1996); Michael Hardt and Antonio Negri, Empire (Cambridge, MA, Harvard University Press, 2000); David Harvey, The Enigma of Capital and the Crisis of Capitalism (Oxford, Oxford University Press, 2010) and Peter Gowan, A Calculus of Power (London and New York, Verso, 2010)). 34. The concept of market democracy is similar to Philip Bobbitt’s ‘market state’: the ‘market-state’ is more focused on making the world ‘available’ for the

NOTES

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36.

37. 38.

39.

40.

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individual to choose – consumption – than it is focused on protecting people’s autonomy or the well-being of the nation. This form of organisation is contra-political: it weakens the presumed ontological cohesion of the State by leaving ever-larger segments of life outside of the State’s purview, thereby affecting commonalities with and responses to growing social constituents. Bobbitt states: ‘Like the nation-state, the market-state assesses its economic success or failure by it society’s ability to secure more and better goods and services, but in contrast of the nation-state it does not see the State as more than a minimal provider or re-distributor.’ Philip Bobbitt, The Shield of Achilles: War, Peace and the Course of History (London, Allen Lane, 2002), p. 233. ‘Low intensity democracies’ refers to situations where there is separation between the political and socio-economic spheres and where electoral democratic procedures merely confirm the existing unequal status quo and do not challenge distributional and international arrangements. (Barry Gills and Joel Rocamora, ‘Low-intensity democracy’, Third World Quarterly 13/3 (1992), pp. 503 –23). Daniel C. Kurtzer, Scott B. Lasensky, William B. Quandt, Steven L. Spiegel and Shibley Z. Telhami, The Peace Puzzle: America’s Quest for Arab-Israeli Peace, 1989-2011 (Ithaca and London, Cornell University Press; and Washington, DC, United States Institute of Peace, 2013), p. 51. Ibid. Robert Satloff and Patrick Clawson, ‘US economic aid to Egypt: designing a new, pro-growth package’, Washington Institute, 7 July 1998. Available at http:// www.washingtoninstitute.org/policy-analysis/view/u.s.-economic-aid-to-egyptdesigning-a-new-pro-growth-package (accessed 1 February 2014). World Trade Organization (WTO), ‘Aid for Trade’. Available at http://www. wto.org/english/tratop_e/devel_e/a4t_e/aid4trade_e.htm (accessed 1 February 2014). For more on the history and evaluation of Aid for Trade, see Joseph Stiglitz, ‘Aid for Trade – perspectives on progress and a way forward’, report of round table discussion by Emily Jones, Commonwealth Secretariat, Global Economics Governance Program, Oxford University, 29 August 2012). Available at http://care6.org/report-on-global-economic-governanceprogramme-w5321/ (accessed 1 February 2014; no longer available). See also Bessma Momani, ‘Promoting economic liberalization in Egypt: from US foreign Aid to Trade and investment’, Middle East Review of International Affairs 7/3 (September 2003), pp. 88 – 101. Available at http://www.gloriacenter.org/2003/09/momani-2003-09-06/ (accessed 1 February 2014). The White House, ‘A national security strategy of engagement and enlargement’, February 1995. Available at http://www.au.af.mil/au/awc/awcgate/nss/nss-95.pdf (accessed 1 February 2014). Bobbitt, The Shield of Achilles, p. 233. For an extensive list of American democracy promotion organisations, see: http://fsi.stanford.edu/docs/ democracy_promotion_organizations_in_the_united_states. Prominent European democracy promotion organisations include the UK’s Department

268

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43. 44.

45.

46.

47.

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for International Development (DFID), https://www.gov.uk/government/ organisations/department-for-international-development; SIDA, http://www. sida.se/english/; and the umbrella organisation of the http://ec.europa.eu/ europeaid/how/finance/eidhr_en.htm. Democratic governance is also a project of the European Commission (EC), http://www.us.undp.org/content/was hington/en/home.html. All accessed 1 February 2014. The term globalisation denotes a process of increasing international integration of the world’s economic and social systems and human activity. See David Held, Anthony McGrew, David Goldblatt and Jonathan Perrato, Global Transformations: Politics, Economics, and Culture (Stanford, CA, Stanford University Press, 1999). Anthony Giddens, The Consequences of Modernity (Cambridge, Polity Press, 1990). ADVANCE Democracy Act of 2007, Section 4.4. Available at http://www. opencongress.org/bill/hr982-110/text (accessed 18 January 2015). Because US aid to Egypt is contingent upon sustaining and promoting a ‘comprehensive peace’ with Israel, difficulties arose in the construction of shared meanings and orientations. These differences are material, ideological, political, economic and social – raising questions about what is ‘rational’ and in whose particular interest specific policies are pursued. Privatisation refers to a wide spectrum of activities: using the private sector to serve or substitute for public sector responsibilities; producing goods and services privately after prior public provision; transferring government functions or assets to the private sector; implementing private market incentives to improve the efficiency of public organisations and engaging the private sector to deliver public services and government management. Gordy Higgins, ‘A review of privatization definitions, options, and capabilities’. Available at http://leg.mt.gov/content/publications/research/past_interim/ defined.pdf (accessed 1 February 2014). Also see, Oleh Havrylyshyn and Donal McGettigan, ‘Privatization in transition countries – lessons of the first decade’, International Monetary Fund, August 1999. Available at http://www. imf.org/external/pubs/ft/issues/issues18/ (accessed 19 January 2015). Even though in Egypt the most frequently heard objections centred on US aid per se – since most people are aware that at least 70 per cent of US aid is spent either in the US on American products or to pay inflated salaries for American experts – most American journalists and academics emphasise aid’s benefits to Egypt. An exception is Jason Brownlee, who showed that authoritarianism in Egypt had American support. Jason Brownlee, Democracy Prevention: The Politics of the US– Egyptian Alliance (Cambridge, Cambridge University Press, 2012). In general, there is little academic research into how US aid works beyond the conventional ‘keeping the peace’ by examining how it constructs economic and civilian relationships between Egypt and Israel. Kenneth Waltz, Theory of International Politics (New York, McGraw Hill, 1979). Sophisticated neorealist approaches are concerned with economic and social underpinnings of the State and historicise its changes. See Stephen

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M. Walt, The Origin of Alliances (Ithaca, NY, Cornell University Press, 1987) and Mearsheimer, The Tragedy of Great Power Politics. Independent causative variables in this schema are changes in the relative powers of states and redefinitions of state interests. 48. Liberal institutionalism emphasises the role of institutions in intermediating outcomes between the State and society. According to Robert O. Koehane, supra-state structures and processes that construct cooperative international arrangements; these are complemented by civil society networks and the world economy, which extend and circumscribe state action. Robert O. Koehane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ, Princeton University Press, 1984). Accounting for change is difficult in this approach because there is little scope for agency (of actors from within institutions). Subscribers encourage pluralist democratic politics, presuming that US hegemony will result in optimum outcomes for prosperity, peace, and stability in all states of the world. See John Rawls, The Law of Peoples: with ‘The Idea of Public Reason Revisited’ (Cambridge, MA, Harvard University Press, 1999) and Nye, Soft Power. 49. World system structuralism sees the world system as a totality where the structural relationship among states is determined by their status as core, peripheral or semi-peripheral to world order. Immanuel Maurice Wallerstein, World Systems Analysis: An Introduction (Durham, NC and London, Duke University Press, 2004); Andre Gunder Frank, The Development of Underdevelopment (Boston, MA, New England Free Press, 1966); Samir Amin, Unequal Development: An Essay on the Social Formations of Peripheral Capitalism, trans. Brian Pearce (New York, Monthly Review Press, 1977). Gramscian approaches insist that IR is inseparable from broad social and economic worldstate structures. This perspective allows for agency from within institutions. In so doing, Gramscian analysis can examine both global processes, which seek to create a hegemonic system, as well as resistances, which use historical conjuncture to illuminate alternative possibilities and linkages that transgress social economic and political constructs. See, for example, Peter Gowan, A Calculus of Power and The Global Gamble: Washington’s Faustian Bid for World Dominance (London, Verso, 1999); Harvey, The Enigma of Capital and The New Imperialism (New York, Oxford University Press, 2003); Robinson, Promoting Polyarchy; Hardt and Negri, Empire, Commonwealth (Cambridge, MA and London, Belknap Press of Harvard University Press, 2009) and Multitude (New York, Penguin Press, 2005); Stephen Gill (ed.), Gramsci, Historical Materialism and International Relations (Cambridge, Cambridge University Press, 1993); Stephen Gill and David Law, ‘Global hegemony and the structural power of capital’, International Studies Quarterly 33/4 (December 1989), pp. 475 – 99; Robert W. Cox, ‘Towards a post-hegemonic conceptualization of world order: reflections on the relevancy of Ibn Khaldun’, in James N. Rosenau and Ernst-Otto Czempiel (eds), Governance without Government: Order and Change in World Politics (Cambridge, Cambridge

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50. 51. 52. 53.

54.

55. 56.

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University Press, 1992) and ‘Multilateralism and world order’, Review of International Studies 18/2 (1992), pp. 161– 80. See, for example, Larry Diamond, ‘Why are there no Arab democracies?’, Journal of Democracy 21/1 (January 2010), pp. 93 – 104. Gramsci, Prison Notebooks. Robert W. Cox, ‘Gramsci, hegemony and international relations: an essay in method’, Millennium 12/2 (1983), pp. 162– 75. The literature on the Middle East prior to the democratisation debate in American foreign policy literature attributed the persistence of authoritarianism to a number of factors, including fear, religion and/or culture. The reasons include: opposition of Islam to democracy (Hamid Enayat, Modern Islamic Political Thought: The Response of the Shi‘i and Sunni Muslims to the Twentieth Century (London, Macmillan, 1982)); that Islam is ‘reactionary’ and non-democratic (Burhan Ghalioun, Le malaise arabe: l’e´tat contre la nation (Paris, La De´couverte, 1991)); that legal (Islamic) non-differentiation between the temporal and the spiritual leads to the absence of the concept of popular sovereignty exercising legality on any points of conflict and that law serves not to regulate contestation, but to restore order (Abdullah Laroui, Islam et Modernite (Paris, La Decouverte, 1987)); that the preponderance of regional conflicts allows for the militarisation of societies and reinforces authoritarian regimes (Patrick Seale, Asad of Syria: The Struggle for the Middle East (London, I.B.Tauris, 1988)); that imperial/colonial rule reinforced the power of tribal chiefs to become absolute rulers, later reinforced by the rentier characters of their economies (Khaldoun Al-Naqeeb, Al-Mujtama‘ wa ad-Dawla fi al-Jazira al-‘Arabiyyah (Beyrouth, Centre pour l’e´tude de l’unite´ arabe, 1987)); rents (Kiren Aziz Chaudhry, The Price of Wealth: Economies and Institutions in the Middle East (Ithaca, NY, Cornell University Press, 1997)) and, that the need for development excludes the option of democracy (Samuel P. Huntington, Political Order in Changing Societies (New Haven, CT, Yale University Press, 1968)). Tony Smith, America’s Mission: The United States and the Worldwide Struggle for Democracy (Princeton University Press, 2012); G. John Ikenberry, ‘America’s Liberal grand strategy: democracy and national security in the post-war era’, in Michael Cox, G. John Ikenberry and Takashi Inoguchi (eds), American Democracy Promotion: Impulses, Strategies, and Impacts (Oxford, Oxford University Press, 2000). See note 22. For the neorealist debate regarding US democracy promotion in the Middle East, see Diamond, ‘Why are there no Arab democracies?’; Smith, America’s Mission and Thomas Carothers, ‘The backlash against democracy promotion’, Foreign Affairs 85/2 (March – April 2006), pp. 55 – 68. Liberal institutionalists like Richard N. Haass also recommend that democracy is not the answer because it may result in radical platforms winning elections. Haass, ‘The new Middle East’, Foreign Affairs 85/6 (November – December 2006), pp. 2 –11.

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57. Simon Springer, ‘Violence, democracy, and neoliberal “order”: the contestation of public space in post transitional Cambodia’, Annals of the Association of American Geographers 99/1 (2009), pp. 138– 62. According to Cox, the elites of globalisation merge into a common structural force even as they compete among themselves for primacy. Cox, ‘Multilateralism and world order’, p. 178. 58. Cox et al., American Democracy Promotion; William Robinson, Promoting Polyarchy. Antonio Gramsci’s (Prison Notebooks) concept of hegemony articulated the capacity of the dominant state and its beneficiaries to structure the limits of resistance politically, economically and ideologically. Organisational structure and control is maintained by creating a ‘common sense’ of bourgeois values. The intellectuals serve a fundamental role in the rationalisation and dissemination of elite-dominant system of beliefs, ideas, values, attitudes and morality that support the status quo. While force is used in the realm of politics and its institutions, consent is used in the ‘private’ sphere of ‘civil society.’ Also see note 8. 59. Robinson, Promoting Polyarchy, p. 626. 60. Numerous polls indicate that most Egyptians (90 per cent in the Zogby 2010 poll) harbour animosity towards Israel. John Zogby, ‘2010 Poll: Egyptians dislike Obama, see US/Israel as “threats”, want clergy more political’, The World Post, 3 February 2011. Available at http://www.huffingtonpost.com/john-zogby/ polls-egypt-obama_b_818192.html (accessed 20 January 2015). A 2012 Pew Research Center poll indicated that 60 per cent of Egyptians viewed US aid as ‘detrimental’ for Egypt, 80 per cent viewed the US unfavourably and 61 per cent want to annul the peace treaty with Israel. Pew Research Center ‘Egyptians remain optimistic, embrace democracy and religion in political life’, Global Attitudes Project, 8 May 2012. Available at http://www.pewglobal.org/2012/ 05/08/egyptians-remain-optimistic-embrace-democracy-and-religion-inpolitical-life/ html (accessed 20 January 2015). See also Khaled Elgindy, ‘Egypt, Israel, Palestine’, The Cairo Review of Global Affairs, Brookings, 25 August 2012. Available at http://www.brookings.edu/research/articles/2012/08/25egypt-israel-palestine-elgindy (accessed 20 January 2015). 61. Marsha Pripstein-Posusney argues that the end result of privatisation might be repressive politics as opposed to reforms. Marsha Pripstein-Posusney, ‘Egyptian privatization: new challenges for the Left’, Middle East Report 210, Reform or Reaction? Dilemmas of Economic Development in the Middle East (Spring 1999), pp. 38 – 40. Michelle Tadros argues that privatisation is affected by political forces within the State that can lead to liberalisation of politics but that the process of economic opening is often accompanied by political turmoil. Michelle Tadros, ‘The politics of privatization in Egypt’, Honors thesis, Colby College, 1994. 62. In Gramsci’s revolutionary perspective (and aspiration), reformismo describes the formation of a national-popular collective will and its ability to ‘burst’, that is self-impose, wide inclusion in political life. It is a period of genuine intellectual and moral reform. Reformism contrasts with liberalism, which is

272

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64. 65. 66. 67.

68. 69.

70.

71.

72.

73. 74.

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more narrowly limited to restricted groups. Gramsci, Prison Notebooks, pp. 132f. It is also contrasts with transformism. Transformismo describes a process of convergence between Left and Right parties during the Italian Risorgimento period (1880s forward). Until 1900, transformism was ‘molecular’, that is political figures were incorporated individually into the (conservative) political class that was averse to mass popular engagement in state life and to reforms that might challenge their dominance. The second period of transformism witnessed the incorporation of entire political groups (from the ‘extremes’ of Left and Right) into the nationalist political party. The effect is to ‘decapitate’ the popular masses (Gramsci’s term). The result was that the ‘State/government was not a national factor. The government in fact operated as a ‘party.’’ Ibid., pp. 58f, 98, 227. Ibid., pp. 58f, 97. Ibid., pp. 58 – 9, 98. Kurtzer et al., The Peace Puzzle, pp. 270–1. Mohamed Hassanein Heikal, quoted in Hosni Guindy and Hany Shukrallah, ‘Liberating Nasser’s legacy’, Al-Ahram Weekly Online 501, 28 September – 4 October 2000. Available at http://weekly.ahram.org.eg/2000/501/nasser2. htm (accessed 8 February 2014). See also Ahmad Ziyada, ‘‘Abd el-Hakim ‘Abd el-Nasser: Al-Sadat Kana Wara’ Hamalat Tashwih Walidi’, Al-Youm al-Sabi‘, 28 September 2012. Available at http://www1.youm7.com/News.asp?News ID¼799402#.UvaRD2JdWSo (accessed 8 February 2014). Heikal, quoted in Guindy and Shukrallah, ‘Liberating Nasser’s legacy’. Samuel P. Huntington and Joan Nelson, No Easy Choice: Political Participation in Developing Countries (Cambridge, MA, Harvard University Press, 1976), pp. 23 – 4. William J. Burns, Economic Aid and American Policy toward Egypt, 1955– 1981 (Albany, NY, State University of New York Press, 1985), pp. 149 – 73; Raymond A. Hinnebusch Jr, Egyptian Politics under Sadat: The Post-Populist Development of an Authoritarian-Modernizing State (Cambridge, Cambridge University Press, 2003), pp. 29– 31, 33, 34– 6. For excellent recent analysis into the legacy of Nasser, see the political research of ‘Amr Sabeh in Egyptian print and electronic media and (Arabic) and in his book Ma‘arik Nassiriyya: qira’a jadida fi tarikhina al-mu‘asir, (Cairo, Muhammad Farouq Fahim, 2011). Sami Sharaf, ‘Thawrat Yuliu wa al-tanmiya’, republished in Al-Fikr al-‘Arabi. Available at http://www.alfikralarabi.org/modules.php?name¼ News&fil e ¼ article&sid ¼ 549 (accessed 8 February 2014). Steven A. Cook, The Struggle for Egypt: From Nasser to Tahrir Square (Oxford, Oxford University Press, 2011), pp. 111-2. According to Sami Sharaf, citing official documents, the greater developmental role of the State – specifically, the projects of nationalisation and Egyptianisation – were necessary to achieve an independent economy,

NOTES

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77. 78. 79. 80.

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especially in light of the unwillingness of the capitalist class to contribute sufficiently to the development project. Notably, the boards of directors of major enterprises were composed as follows: 21 per cent Muslim Egyptians, 4 per cent Christian Egyptians, 30 per cent European, 18 per cent Jewish, 8 per cent Greek and 11 per cent naturalised Egyptians. Sharaf, ‘Thawrat Yuliu wa al-Tanmiya’. Tarek Osman, Egypt on the Brink: From Nasser to Mubarak (New Haven, CT, Yale University Press, 2010), p. 48. Ihab Shawqi, ‘Al-Baheth al-siyasi ‘Amr Sabeh’, Shabakat al-Akhbar al‘Arabiyya, http://www.anntv.tv/new/showsubject.aspx?id¼ 81597 (accessed 5 February 2014). Sharaf, ‘Thawrat Yuliu wa al-tanmiya’. This pattern is in line with the prediction by Cox et al., American Democracy Promotion, regarding the behaviour of transnational elite. Bearce, ‘Why foreign aid may be less effective’. Lisa Anderson, ‘Arab democracy: dismal prospects’, World Policy Journal 18/3 (Fall 2001), pp. 53– 60; Bruce Rutherford, Egypt after Mubarak: Liberalism, Islam, and Democracy in the Arab World (Princeton, NJ, Princeton University Press, 2008); Eva Bellin, ‘The robustness of authoritarianism in the Middle East: exceptionalism in comparative perspective’, Comparative Politics 36/2 (January 2004), pp. 139– 57. The transparency and good governance agendas of international organisations advocate expanding surveillance and (authoritarian) enforcement of laws within state institutions. Susanne Soederberg, ‘Grafting stability onto globalisation? Deconstructing the IMF’s recent bid for transparency’, Third World Quarterly 22/5 (October 2001), pp. 849– 64. Alex Jeffrey argues that ‘democratisation’ and ‘democracy promotion’ use ‘good governance’ and ‘transparency’ agendas as politico-economic and imperial solutions. The US uses international organisations to exercise authority, even via the ‘civil society’ groups that they constitute, over the internal authority of these states. The result is neither sovereignty nor democracy. In fact, these efforts expose the paradox of suspending sovereignty and the radical neo-liberalisation of the economy while international agencies are supposed to show to domestic electorates that interventions foster democratic governance. (Alex Jeffrey, ‘The politics of “democratization”: lessons from Bosnia and Iraq’, Review of International Political Economy 14/3 (August 2007), pp. 444 – 66.) A rare exception is Alfred W. McCoy, Policing America’s Empire: The United States, the Philippines, and the Rise of the Surveillance State (Madison, WI, University of Wisconsin Press, 2009). On how neoliberalism may encourage corruption, see Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (New York, Bloomsbury Press, 2008); Michel Chossudovsky, The Globalization of Poverty: Impacts of IMF and World Bank Reforms (London and New York, Zed Books, 1997) and Joseph Stiglitz, Globalization and Its Discontents (New York and London, W.W. Norton &

274

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Company, 2002) and Ibid, Making Globalization Work (NY & London, W. W. Norton & Company, 2006). 83. Mary Jane Bolle, Alfred Prados and Jeremy M. Sharp, Foreign Affairs, Defense, and Trade Division, ‘Qualifying Industrial Zones in Jordan and Egypt’, Report RS22002, Congressional Research Service, 7July 2006. WikiLeaks document release available at http://wikileaks.org/wiki/CRS-RS22002, 2 February 2009 (accessed 1 February 2014). 84. Selective use of issues such as human rights can be used as pretexts in order to facilitate interventions by dominant powers across putatively sovereign borders. See David N. Gibbs, The Political Economy of Third World Intervention (Chicago, IL and London, University of Chicago Press, 1991), ‘Power politics, NATO, and the Libyan intervention’, Counterpunch, 15 September 2011. Available at http://www.counterpunch.org/2011/09/15/power-politics-natoand-the-libyan-intervention/ (accessed 20 January 2015) and ‘Pretexts and US foreign policy: the war on terrorism in historical perspective’, New Political Science 26/3 (September 2004), pp. 293– 321. 85. John P. Entelis did not challenge a generalisation that the Arab personality type is alien from the Western personality. Entelis, Culture and Counterculture in Moroccan Culture, (Westview Press, 1989). Entelis (1989) and Bill and Springborg posited that Islam, tribalism and deliberate government policy work against civic organisation. James A. Bill and Robert Springborg, Politics in the Middle East (Glenview, IL, Scott, Foresman/Little, Brown Higher Education, 1990). Albert Hourani used Ibn Khaldun’s concept of kinship (‘asabiyya) to explain how it can function to enhance group feeling over democratic affiliations. Albert Hourani, Arabic Though in the Liberal Age, 1798– 1839 [1962] (Cambridge and New York, Cambridge University Press, 1983). Hisham Sharabi argued that the interaction between patriarchy and modernism resulted in too much authority/domination permeating all aspects of political and social life in the Arab world. Hisham Sharabi, NeoPatriarchy: A Theory of Distorted Change in Arab Society (New York, Oxford University Press, 1988). Elie Kedourie and Bernard Lewis argue that Islam and Arab culture are ill-suited to democracy. Elie Kedourie, Politics in the Middle East (New York, Oxford University Press, 1992); Bernard Lewis, “The roots of Muslim rage,” The Atlantic, September 1, 1990. Samuel P. Huntington at first blamed Islam and then later revised his thesis to argue that Islam contains elements both for and against democracy Samuel P. Huntington. ‘Will more countries become democratic?’, Political Science Quarterly, 99 (1984), pp. 193 – 218; The Third Wave: Democratization in the Late Twentieth Century (Norman, OK, University of Oklahoma Press, 1991). Survey research supports that Islam is not a statistically significant factor in determining attitudes towards political openness. See Mark Tessler, ‘Islam and democracy in the Middle East: the impact of religious orientations on attitudes toward democracy in four Arab countries’, Comparative Politics 34/3 (April 2002), pp. 337 – 54. See also Mark A. Tessler, Jodi Nachtwey and Anne Banda, The Evaluation and

NOTES TO PAGES 20 –21

86.

87. 88.

89. 90. 91.

92.

93. 94.

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Application of Survey Research in the Arab World (Boulder, CO, Westview Press, 1989) and Amaney Jamal and Mark Tessler, ‘The democracy barometers: attitudes in the Arab World’, Journal of Democracy 19 (January 2008), pp. 97 – 110. Kurzman and Naqvi observed a trend towards more liberal electoral platforms. ‘Liberalised’ platforms, according to Kurzman, mean dropping the demand to implement al-shari‘a, the religious ban on interest, mention of ‘jihad’ or ‘hostility’/opposition to Israel. Such platforms instead emphasises women’s and minority rights and ‘democracy’ that does not challenge Western interests in the region. Charles Kurzman and Ijlal Naqvi, ‘Do Islamists vote Islamic?’ Journal of Democracy 21/2 (April 2010), pp. 50 – 63, p. 59; Sami Zubaida, ‘Is there a Muslim society? Ernest Gellner’s sociology of Islam’, Economy and Society 24/2 (1995), pp. 151–88. Zubaida rebuts Gellner’s theory of Muslim Society (Ernest Gellner, Muslim Society (Cambridge, Cambridge University Press, 1983), pp. 88, 92, 94), contending that social and political forms evolved by Muslims could be conducive to modernity and progress. Zubaida, ‘Is there a Muslim society?’, p. 184. Thomas Carothers, ‘Thinking about hybrid regimes’, Journal of Democracy 13/4 (April 2002), pp. 21 – 35 and ‘The end of the transition paradigm’, Journal of Democracy 13/1 (January 2002), pp. 5 –21. Pripstein-Posusney, ‘Egyptian privatization’. Vickie Langohr, ‘Too much civil society, too little politics: Egypt and liberalizing Arab regimes’, Comparative Politics 36/2 (January 2004), pp. 181– 204. Bellin, ‘The robustness of authoritarianism’. Samer Soliman, The Autumn of Dictatorship: Fiscal Crisis and Political Change in Egypt under Mubarak (Stanford, CA, Stanford University Press, 2011). Soliman’s book was originally published in Arabic in 2006, with the Joel Migdal-inspired title of Al-Nizam al-Qawi wa al-Dawla al-Da‘ifa (The Strong Regime and the Weak State). The topics that Soliman addressed in his book were first explored in Egypt years before by Ahmed al-Sayyed al-Naggar and ‘Abd el-Khalek Farouk, among others. The findings in Egypt are in line with those by Springer and Gill. Springer, ‘Violence, democracy, and neoliberal “order”’; Stephen Gill, ‘The global panopticon? The neoliberal state, economic life, and democratic surveillance’, Alternatives: Global, Local, Political 20/1 (January – March 1995), pp. 1 – 49. Lisa Anderson, ‘Demystifying the Arab Spring: parsing the differences between Tunisia, Egypt, and Libya’, Foreign Affairs 90/3 (May/June 2011), pp. 2–7. Anderson argued that economic order (governments’ increased ability to tax, regulate and monitor non-market transactions) would (presumably) remove the ‘frightening’ ignorance of the possible results of democratic elections, thereby reducing governments’ fear of democratisation. Anderson, ‘Arab democracy: dismal prospects’. Unlike Springer, she does not question that the neoliberal ordering of society may involve the (autocratic) insulation of the economic sphere via the minimalisation of popular input into economic policy

276

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96. 97.

98.

99.

100.

101.

102.

103.

104.

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making as well as the regulatory environment needed to enforce the new order. Springer, ‘Violence, democracy, and neoliberal “order”’. Christian Houle, ‘Inequality and democracy: why inequality harms consolidation but does not affect democratization’, World Politics 61/4 (October 2009), pp. 589–622. Timothy Mitchell, Rule of Experts: Egypt, Techno-Politics, Modernity (Berkeley, CA, University of California Press, 2002). Timothy Mitchell, ‘The limits of the state: beyond statist approaches and their critics’, The American Political Science Review 85/1 (March 1991), pp. 77– 96 and ‘No factories, no problems: the logic of neo-liberalism in Egypt’, Review of African Political Economy 26/82 (December 1999), pp. 455 – 68. Michael Barnett, ‘Building a Republican peace: stabilizing states after war’, International Security 30/4 (Spring 2006), pp. 87 – 112 and ‘Sovereignty, nationalism, and regional order in the Arab States system’, International Organization 49/3 (Summer 1995), pp. 479– 510. Reem Abou-El-Fadl, ‘The road to Jerusalem through Tahrir Square: antiZionism and Palestine in the 2011 Egyptian revolution’, Journal of Palestine Studies 41/2 (Winter 2012), pp. 6 – 25. Mustafa Bassiouni, ‘Al-Naqabat al-mustaqilla wa makhater al-buroqratiyya’, As-Safir, 27 April 2014. Available at http://www.assafir.com/Article/1/348411 (accessed 12 May 2014). See The Arab Opinion Project: The Arab Opinion Index (Doha, Arab Center for Research and Political Studies, 2012). Available at http://english.dohainstitu te.org/release/5083cf8e-38f8-4e4a-8bc5-fc91660608b0 (accessed 1 February 2014). The research was conducted with more than 16,000 Arabs in the first half of 2011; the results were published on 1 March 2012. The ‘cold peace’, despite the treaties with Jordan and Egypt, was acknowledged in US official circles. See Bolle, Prados and Sharp, ‘Qualifying Industrial Zones in Jordan and Egypt’. This can be seen, for instance, in the exclusion of the textile factories in ElMahalla al-Kubra, by far the largest in terms of employment and production, from the QIZ agreement. Since the main export from Egypt to the United States was textiles, including El-Mahalla would have enabled Egypt to benefit from its marginal advantage in labour. It also would have rendered the textile deals (that by QIZ rules had to include an Israeli partner) even less viable than they turned out to be. This will be discussed later in the book. Awlad al-Ard Association for Human Rights, ‘Ta‘dilat qanun al-ta’min alijitima‘i wa salb huquq al-‘amilin fi Misr’, Silsilat al-Huquq al-Iqtisadiyya wa al-Ijtima‘iyya (Economic Rights Series), May 2003. Also see Muhsin ‘Awad (ed.), Huquq al-Insan wa al-Tanmiya (Cairo, United Nations Development Program and the Arab Organization for Human Rights, 2003) (from the Regional Symposium focusing on human rights and development, held in Cairo, 7 – 9 June 1999); Fawwaz Fawq al-‘Ada and Muhammad Fa’iq, ‘AlMuqaddima’, ibid., pp. 341– 3 and Amani Qandil, ‘Waraqat al-‘amal, dawr al-

NOTES

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106.

107.

108. 109.

110.

111.

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munazzamat ghayr al-hukumiyya fi al-tanmiyya, itar nazari’, ibid., pp. 344 – 70. Ahmed al-Sayyed al-Naggar, ‘Al-Taba‘iyya al-iqtisadiyya wa al-nahb al-iqtisadi al-rahin li-Misr’, Al-Ahram, 16 February 2012. Available at http://digital.ahram. org.eg/articles.aspx?Serial¼ 802956&eid ¼ 46 (accessed 1 February 2014). Armen A. Alchian and Harold Demsetz, ‘Production, information costs, and economic organization’, American Economic Review 62/5 (December 1972), pp. 777 – 95, cited in Stephen Yeaple and Warren Moskowitz, The Literature on Privatization (New York, Federal Reserve Bank of New York, 1995), p. 6. Yaseen Noorani, Culture and Hegemony in the Colonial Middle East (New York, Palgrave Macmillan, 2010). Noorani argues that the sense of nationality and liberal and democratic social ideals emerged from existing cultural values. The success of this process was primarily due to the fact that reformers and intellectuals were able to build upon and develop local ideals, transforming virtue into nationality. For a detailed discussion of the literature on privatisation, please see Chapter 2. See, for example, discussions by subaltern theorists about the hegemonic production of urban subjecthood: Ananya Roy, ‘Strangely familiar: planning and the worlds of insurgence and informality’, Planning Theory 8 (2009), pp. 7 – 11 and ‘The 21st-century metropolis: new geographies of theory’, Regional Studies 43 (2011), pp. 819– 30; Partha Chatterjee, The Politics of the Governed: Reflections on Popular Politics in Most of the World (New York, Colombia University Press, 2004). Noueihid and Warren argued that the development of non-governmental organisations (NGOs) starting in the mid-1980s, gave governments a chance to monitor civil society. Lin Noueihed and Alex Warren, The Battle for the Arab Spring: Revolution, Counter-revolution and the Making of a New Era (New Haven, CT, Yale University Press, 2012), p. 15, quoted in Laura Khoury and Seif Da‘na, ‘Decolonizing the geographies of resistance: imperialist cartography of the Arab world’, The Arab World Geographer 15/3 (2012), pp. 189–225. In Egypt, this phenomenon was accompanied by the creation of GONGOS (governmental non-governmental organisations). Activist leaders I interviewed such as Ghada Shahbandar (Egyptian Organization for Human Rights), described how GONGOs created by regime cronies specialised in applying for grants from the US government and worked with Gamal Mubarak. One such individual, Dr Yumna al-Hamaqi, member in the (former) National Democratic Party’s Political Council, was described by Shahbandar as the ‘Queen of American funding’. Interview, 14 October 2012. See also James V. Grimaldi and Robert O’Harrow Jr, ‘In Egypt, corruption cases had an American root’, The Washington Post, 20 October 2011. Available at http://www.washingtonpost.com/ investigations/in-egypt-corruption-had-an-american-root/2011/10/07/gIQAAp WoyL_story.html (accessed 1 February 2014). Using the imagery of maps to describe power and its resistances, Khoury and Da‘na, ‘Decolonizing the geographies of resistance’, argue for the need to reject

278

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113.

114.

115.

116. 117.

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and replace the imperial cartographies of the Arab world by ‘decolonizing the geographies of resistance’. They emphasise that the two maps rarely, if ever, coincide. For example, Egyptian companies could partner with Israelis or serve as fronts for Israeli companies. They could then export Israeli products to states in the Arab world that observed (at least overtly) the official Arab boycott of Israel. Egyptian government statistics show that this did not make ‘rational’ economic sense in many cases. Economists (leftist/Nasserist) raised public awareness about these issues. See ‘Abd al-Khalek Farouk, Juzour al-Fasad alIqtisadi fi Misr: Bi’at al-‘Amal wa Siyasat al-Ujour wa al-Murattabat fi Misr, 1963– 2006 (Cairo, Dar al-Shorouk, 2008), al-Naggar 2005, 2012. Jeremy M. Sharp, ‘Egypt: background and US relations’, Congressional Research Service, 6 December 2012, p. 6, fn 3. Available at http://www.dtic. mil/cgi-bin/GetTRDoc?AD¼ADA584534 (accessed 20 January 2015). I am referring to the internal competition among the capitalist and ruling elite (Gibbs, The Political Economy of Third World Intervention), who may vie to offer concessions and accommodations to the external hegemon. For example, the IMF and the US have on more than one occasion declared that the pace of economic reforms in Egypt exceeded their recommendations. The ability to exceed expectations is frequently tied to avoidance of popular input and ‘sweetheart’ deals that may advantage the elite. One example is the diversion of social wealth via questionable pricing of assets for privatisation, which may facilitate the cooptation and cooperation of some elite who form the gateway that allows global financial penetration. Such pricing may also be the implicit cost of doing business, unacknowledged and unmeasured. See the works of Joseph Stiglitz, Globalization and Its Discontents and Making Globalization Work (New York and London, W.W. Norton & Company, 2006), Michel Chossudovsky, The Globalization of Poverty and The Globalization of Poverty and the New World Order (Quebec, Centre for Research on Globalization, 2003) and Chang, Bad Samaritans, for discussions of how neoliberal transformations of economies may open the door for corruption that sometimes serves as a means to penetrate national economies and to extract and transfer a portion of national productivities. The phenomenon of excessive corruption was a strong factor in the virulence of resistant uprisings and mobilised publics. For a discussion of the development of counter-hegemony that builds on existing cultural platforms see Yaseen Noorani, ‘Redefining resistance: counterhegemony, the repressive hypothesis and the case of Arabic modernism’, in Yaseen Noorani and John Chalcraft (eds), Counterhegemony in the Colony and Postcolony (Houndsmills, Palgrave Macmillan, 2007), pp. 75 –99 and Culture and Hegemony. John Rawls, A Theory of Justice (Cambridge, MA, Belknap Press of Harvard University Press, 1971); Nye, Soft Power; Haass, ‘The new Middle East’. ‘Imad Gad objected to the fact that military aid to Egypt translated into budgetary military expenditures among the lowest in the region, in contrast

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with Israel which has one of the highest proportions of military expenditures in the world. (Interview, 2012.) In fact the opposite was true, as pointed out by economists Ahmed al-Sayyed al-Naggar of Al-Ahram Center for Political and Strategic Research and ‘Abdel Khalek Farouk of the Nile Center for Economic and Strategic Studies. Both presented evidence comparing the relative sizes of Israeli versus Egyptian productivity (in seeds, textiles, etc.), exports and even new employment opportunities in sectors linked to Israel. In the cases they cite, Egyptian production either vastly supersedes the Israeli one or the benefits are skewed in Israel’s favour. American and regime claims were also challenged publicly by Foreign Service representatives, labour activist leaders such as Kamal Khalil and rank and file labour, even in governmentdominated labour unions. Previous books on the subject of subordination that were written by prominent intellectuals in Egypt include: Galal Amin, Tanmiya am Taba‘iyya, Iqtisadiyya wa Thaqafiyya: Khurafat Sha’i‘a ‘an al-Takhalluf wa al-Tanmiyya wa ‘an alRakha’ wa al-Rafahiyya (Cairo, Al-Hay’a al-Misriyya al-‘Amma li al-Kitab, 1995) and ‘Awlamat al-Qahr: Al-Wilayat al-Muttahida wa al-‘Arab wa alMuslimin Qabl wa ba‘d Ahdath September 2001 (Cairo, Dar al-Shurouk, 2002); Muhammad Nawwar (ed.), Amraka – la ‘Awlama: Protocolat ‘Colin Powell’ liIslah wa Tahthib al-‘Arab (Lazoghli: Jihad li al-Nashr wa al-Tawzi‘, 2003). Also see ‘Nahnu nuhibb al-kilab, Amraka wa ‘askara. la ‘awlama’, Introduction, pp. 7–13; Fahmi Huweidi, ‘Durous khususiyya Amrikiyya li al-‘Arab wa alMuslimin’, pp. 51–8 and ‘Al-‘Amm Sam. Wa al-mazid min ta‘miq al-Amriki’, pp. 83–9; Nader Al-Firgani, ‘Al-Wisaya al-Amrikiyya didd al-tanmiyya alinsaniyya’, reprinted from Jaridat al-‘Arabi, 5 January 2003, pp. 92–4; and Soheir Morsy, ‘Amrika tatahawwal li al-fashiyya’, pp. 143–53, all in Nawwar, Amraka – la ‘Awlama. See also Dina Galal, Dawr wa Athar al-Ma‘ouna alIqtisadiyya al-Amrikiyya ‘ala al-Iqtisad al-Misri (1975-1983), Master’s thesis (College of Economics and Political Sciences, Cairo University, 2008). See the Appendix for details on my interviewees Kamal ‘Abbas, Rif‘at Sayyed Ahmed, Hazem el-Beblawy, Mustafa al-Fiqi, Ahmed Abu Zeid, Ahmed alSayyed al-Naggar, ‘Imad Gad, Hussam Gamal al-Din, Saad Eddin Ibrahim, Kamal Khalil, Ghada Shahbandar, Dina Shehata and Ikram Youssef. Interview, Saad Eddin Ibrahim, 2012. Years before the uprising, Samir Amin had argued that a ‘popular national’ project is the only solution to the peripheral subordination of the state at the hand of the bourgeoisie. He posited that the bourgeoisie in the periphery are handicapped in constructing a bourgeois national state due to external factors, which produce domestic inequality. To ‘survive’, the bourgeois-led state must avoid conflict with the dominant power. Therefore, the peripheral state is necessarily despotic because it is weak. It must suppress popular forces in order to survive internationally. Samir Amin, ‘Democracy and national strategy in the periphery’, Third World Quarterly, 9/4 (October 1987), pp. 1129– 56.

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Chapter 1 Creating the Macro-Environment for ‘Stability and Growth’ that Integrates a Globalising ‘Warm Peace’ 1. ‘O my fear that the day of victory, Sinai returns and Egypt goes.’ Authorship undetermined: attributed to Ahmed Fu’ad Negm, Sayyid Hijab and Salah Jahin. This verse became very popular among Egyptian intellectuals and leftists on the eve of celebration for the liberation of Sinai in 1973. 2. Captain Sir Basil Liddell Hart, Thoughts on War (London, Faber & Faber, 1944). 3. Simone Dietrich, ‘Foreign aid delivery, donor selectivity and poverty: a political economy of aid’, working paper, Conference on Foreign Aid, Niehaus Center for Globalization and Governance, Princeton University, 26 – 27 April 2013. 4. Robert Bates, Prosperity and Violence: the Political Economy of Development (New York, W.W. Norton, 2001). Also see Jeffrey Herbst, States and Power in Africa: Comparative Lessons in Authority and Control (Princeton, NJ, Princeton University Press, 2000) and Atul Kohli, State-Directed Development: Political Power and Industrialization in the Global Periphery (New York, Cambridge University Press, 2004). 5. Anne Mariel Peters, ‘Foreign aid and the primacy of coalition politics’, Special Relationships, Dollars, and Development: US Foreign Aid and StateBuilding in Egypt, Jordan, South Korea, and Taiwan, presented to The Center for Global Development, Washington, DC, 20 February 2009. Available at http://www.cgdev.org/doc/events/2.20.09/Peters_CGD_Presentation.pdf (accessed 1 February 2014). 6. See, for example, US Embassy in Cairo, WikiLeaks cable, Cairo 5350, 5 July 2005. Available at http://wikileaks.ch/cable/2005/07/05CAIRO5350.html (accessed 1 February 2014). 7. David H. Bearce, ‘Why foreign aid may be less effective at promoting economic growth in more democratic countries’, paper presented at the annual meeting of the ISA’s 50th Annual Convention Exploring the Past, Anticipating the Future, New York Marriott Marquis, New York, 15 February 2009. Available at http://citation.allacademic.com/meta/p311285_index.html (accessed 1 February 2014). 8. William Easterly, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (New York, Penguin Press, 2006). 9. The following studies integrate a non-economic agenda and argue that it stunts institutional development: Alfred Maizels and Machiko K. Nissanke, ‘Motivations for aid to developing countries’, World Development 12/9 (1984), pp. 879– 900; William N. Trumbull and Howard J. Wall, ‘Estimating aid allocation criteria with panel data’, Economic Journal 104/425 (1994), pp. 876– 82; Alberto Alesina and David Dollar, ‘Who gives foreign aid to whom and why?’, Journal of Economic Growth 5 (March 2000), pp. 33 – 63; David Bearce and Daniel Tirone, ‘Foreign aid, recipient growth, and the strategic goals of

NOTES

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11.

12. 13. 14. 15.

16.

17.

18.

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donor governments’, paper for the APSA (2007). Available at http://citation. allacademic.com/meta/p_mla_apa_research_citation/2/0/9/5/5/p209559_ index.html (accessed 1 February 2014). These works attribute the problem to the aid recipient, who is assumed to be unwilling to undertake the painful process of adjustment, and not to the aid donor, who may prefer the more direct and efficient methods of non-democratic procedures. Jason Brownlee has argued that in practice, US aid promoted authoritarianism not democracy. In reaching this conclusion, his research focused largely on military and security cooperation. Jason Brownlee, Democracy Prevention: The Politics of the US – Egyptian Alliance (Cambridge, Cambridge University Press, 2012). Susanne Soederberg, ‘Grafting stability onto globalisation? Deconstructing the IMF’s recent bid for transparency’, Third World Quarterly 22/5 (October 2001), pp. 849 – 64. Susanne Soederberg, Global Governance in Question: Empire, Class, and the New Common Sense in Managing North-South Relations (London, Pluto Books and Ann Arbor, MI, University of Michigan Press, 2006). Soheir A. Morsy, American Aid to Egypt: A Special Case for a General Politics (AlMuwajaha, Lajnat al-Difa‘ ‘an al-Thaqafa al-Qawmiyya, Cairo, 1985). Samer Soliman, The Autumn of Dictatorship: Fiscal Crisis and Political Change in Egypt under Mubarak (Stanford, CA, Stanford University Press, 2011). Soliman, The Autumn of Dictatorship, p. 159. Mitchell argues that neoliberalism reallocated public wealth to benefit wellconnected individuals. Timothy Mitchell, Rule of Experts: Egypt, Techno-Politics, Modernity (Berkeley, CA, University of California Press, 2002). Numerous polls indicate that most Egyptians (90 per cent in the Zogby 2010 poll) harbour animosity towards Israel. John Zogby, ‘2010 Poll: Egyptians dislike Obama, see US/Israel as ‘threats’, want clergy more political’, The World Post, 3 February 2011. Available at http://www.huffingtonpost.com/john-zogby/ polls-egypt-obama_b_818192.html (accessed 20 January 2015). A 2012 Pew Research Center poll indicated that 60 per cent of Egyptians viewed US aid as ‘detrimental’ for Egypt, 80 per cent view the US unfavourably and 61 per cent want to annul the peace treaty with Israel. Pew Research Center, ‘Egyptians remain optimistic, embrace democracy and religion in political life’, 8 May 2012. Available at http://www.pewglobal.org/2012/05/08/egyptians-remainoptimistic-embrace-democracy-and-religion-in-political-life/ html (accessed 20 January 2015). See also Khaled Elgindy, ‘Egypt, Israel, Palestine’, The Cairo Review of Global Affairs, Brookings, 25 August 2012. Available at http:// www.brookings.edu/research/articles/2012/08/25-egypt-israel-palestine-el gindy (accessed 20 January 2015). These findings are in line with Timothy Mitchell’s chapter ‘Dreamland’ in Rule of Experts in which he describes the disfigured form of Egyptian neoliberalism, even though it was lauded by international financial institutions (IFIs). These results are not atypical. See Philip Bobbitt, The Shield of Achilles: War, Peace and the Course of History (London, Allen Lane, 2002).

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19. Nicola Pratt, ‘Bringing politics back in: examining the link between globalization and democratization’, Review of International Political Economy 11/2 (May 2004), pp. 311– 36, p. 318; Randall D. Germain and Michael Kenny, ‘Engaging Gramsci: International Relations Theory and the new Gramscians’, Review of International Studies 24 (1998), pp. 3 – 21, p. 18. 20. See Gouda ‘Abdel Khalek, ‘Foreign economic aid and income distribution in Egypt: 1952–1977’, in Gouda Abdel Khalek and Robert Tignor (eds), The Political Economy of Income Distribution in Egypt (New York, Holmes and Meier Publishers, 1982), pp. 435–68 and also ‘Growth, economic policies, and employment: linkages in Mediterranean countries, the cases of Egypt, Israel, Morocco and Turkey’, International Labor Organization (Geneva, International Labour Organization, 2010). Available at http://www.ilo.org/wcmsp5/groups/ public/ – -ed_emp/ – -emp_policy/documents/publication/wcms_161399.pdf (accessed 1 February 2014). 21. There is a large body of literature among Egyptian intellectuals addressing the production of subordination (taba‘iyya) in Egypt. See, for example, Galal Amin, Tanmiya am Taba‘iyya, Iqtisadiyya wa Thaqafiyya: Khurafat Sha’i‘a ‘an alTakhalluf wa al-Tanmiyya wa ‘an al-Rakha’ wa al-Rafahiyya (Cairo, Al-Hay’a al-Misriyya al-‘Amma li al-Kitab, 1995) and ‘Awlamat al-Qahr: Al-Wilayat alMuttahida wa al-‘Arab wa al-Muslimeen Qabl wa Ba‘d Ahdath September 2001 (Cairo, Dar al-Shurouk, 2002); Muhammad Nawwar (ed.), Amraka – la ‘Awlama: Protocolat ‘Colin Powell’ li-Islah wa Tahzib al-‘Arab (Lazoghli, Jihad li al-Nashr wa al-Tawzi‘, 2003); Fahmi Huweidi, ‘Durous khususiyya Amrikiyya li al-‘Arab wa al-Muslimin’, in Nawwar, Amraka, pp. 51–8 and ibid., pp. 83–9; Nader Al-Firgani, ‘Al-Wisaya al-Amrikiyya didd al-tanmiyya al-insaniyya’, in Nawwar, Amraka; Ahmed al-Sayyed al-Naggar, ‘Al-Taba‘iyya al-iqtisadiyya wa al-nahb al-iqtisadi al-rahin li-Misr’, Al-Ahram, 16 February 2012. Available at http://digital.ahram.org.eg/articles.aspx?Serial¼ 802956&eid ¼ 46 (accessed 1 February 2014); Soheir Morsy, ‘Amrika tatahawwal ila al-fashiyya’, in Nawwar, Amraka, pp. 143–53; and Dina Galal, Dawr wa Athar al-Ma‘ouna alIqtisadiyya al-Amrikiyya ‘ala al-Iqtisad al-Masri (1975-1983), Master’s thesis (College of Economics and Political Sciences, Cairo University, 2008). 22. A survey of Egyptian opinions of US aid from 2006 to 2013 (by Pew Research), reveals that at no point did more than 30 per cent of Egyptians have a favourable opinion of the United States. See Pew Research Center, ‘Opinion of the United States’, Global Attitudes Project (updated 2014). Available at http://www. pewglobal.org/database/indicator/1/country/64/ (accessed 1 February 2014). Eighty-two per cent of Egyptians oppose American aid. Dalia Mogahed, ‘Opinion briefing: Egyptians skeptical of US intentions’, Gallup, 21 September 2012. Available at http://www.gallup.com/poll/157592/opinion-briefing-egyp tians-skeptical-intentions.aspx (accessed 1 February 2014). 23. Ahmed al-Sayyed al-Naggar, ‘Iqtisad al-Jaysh: Bayn al-tahwil wa mantiq tafkik al-dawla’. Al-Ahram, 12 April 2012. Available at http://digital.ahram. org.eg/articles.aspx?Serial¼865724&eid ¼ 46 (accessed 1 February 2014).

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24. United Press International (UPI), ‘Israel-Egypt peace plan is disclosed’, St Petersburg Times, 20 August 1975. Available at http://news.google.com/ newspapers?nid¼ 888&dat ¼ 19750820&id ¼ C3VIAAAAIBAJ&sjid ¼ Vl8DAAAAIBAJ&pg ¼ 2450,3138489 (accessed 1 February 2014). See also Ibrahim Nawwar, ‘Al-‘Ilaqat al-Misriyya al-Isra’iliyya: al-Itar wa alnata’ij, ba‘da ‘am min al-tatbi‘, Al-Ahram, 1 July 1981. Available at http:// digital.ahram.org.eg/articles.aspx?Serial¼ 215095&eid ¼ 13 (accessed 1 February 2014). 25. Al-Naggar, ‘Al-Taba‘iyya [. . .]’. 26. Jacqueline Bell, Regional Inspector General/Cairo, ‘Audit of USAID/Egypt’s Democracy and Governance Activities (Audit Report No. 6-263-10-001-P)’, 27 October 2009, 1. 27. Jeremy M. Sharp, ‘CRS Issue Brief for Congress: Egypt-United States relations’, Congressional Research Service, Library of Congress: 15 February 2005, p. 3. Available at http://www.au.af.mil/au/awc/awcgate/crs/ib93087.pdf (accessed 1 February 2014). Policy reports over the years emphasise a US goal: maintaining stability. Despite the newer emphasis on ‘democracy and governance’, this emphasis reflects the original US strategy outlined by Samuel B. Huntington (Political Order in Changing Societies (New Haven, CT, Yale University Press, 1968)) in which he advised that the US pursue stability not democracy in the region. 28. The Sunlight Foundation has compiled a database of lobbying efforts on behalf of the Egyptian military. See Egypt’s Foreign Lobbyist Contacts (https://data. sunlightlabs.com/Government/Egypt-s-Foreign-Lobbyist-Contacts/hck6v3t4/widget_preview?height¼ 425&variation ¼ 38mm-etse&width ¼ 500, accessed 1 February 2014). Lobbying was dominated by the Livingston Group, the Podesta Group and the Moffett Group under an umbrella lobbying group called the PLM Group. See Lizzie O’Leary and James Rowley, ‘Egypt hired top Washington lobbyists to protect alliance, gain US access’, Bloomberg, 1 February 2011. Available at http://www.bloomberg.com/news/2011-02-01/ egypt-hired-top-washington-lobbyists-to-protect-alliance-gain-u-s-access. html (accessed 1 February 2014). 29. Paul Blumenthal, ‘Lobbying contacts by Egypt’s Washington lobbyists’, The Sunlight Foundation, 31 January 2011. Available at http://sunlightfou ndation.com/blog/2011/01/31/lobbying-contacts-by-egypts-washington-l obbyists/ (accessed 1 February 2014). For a discussion of the economic role played by the Egyptian military and the international capitalist ties, see Shana Marshall and Joshua Stacher, ‘Egypt’s generals and transnational capital’, Middle East Report 262 – Pull of the Possible (Spring 2012), pp. 12 – 18, p. 12. 30. Cable released by WikiLeaks. Ambassador Margaret Scobey, Cable CAIRO353 (Secret), 26 February 2009. Available at http://wikileaks.org/cable/2009/02/ 09CAIRO353.html (accessed 1 February 2014). 31. US State Department, ‘Economic Support Fund’, 2009. Available at http:// www.state.gov/documents/organization/101425.pdf (accessed 1 February 2014).

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32. Patrick Leahy, ‘Provisions relevant to the situation in Egypt in the FY12 State Department and Foreign Operations Appropriations Law’, Section 7041, 3 July 2013. Available at http://www.leahy.senate.gov/press/provisions-relevantto-the-situation-in-egypt-in-the-fy12-state-department-and-foreign-operationsappropriations-law_– (accessed 1 February 2014). 33. See notes 9 and 27. 34. US Agency for International Development, ‘Direct economic benefits of US assistance programs’, 1999. Available at http://www.lobbywatch.org/profile1. asp?PrId¼165 (accessed 13 May 2014). 35. Quoted in Abd al-Rahim al-Laithi and Muhammad al-Sharif al-Muraqib, ‘AlMa‘ouna. Sanawat min al-minah al-mashrouta wa al-matalib al-mustajaba wa al-taba‘iyya’, Masress, 21 February 2012. Available at http://www.masress. com/almorakeb/28622 (accessed 1 February 2014). 36. Ibid. 37. Elliot Berg, Richard Sines and James Walker, Interim Evaluation: Sector Policy Reform Program and Technical Support for Sector Policy Reform Project – Egypt, Development Alternatives Inc., USAID, USAID Mission to Egypt (Sponsor), July 1994. Between 1993 and 2000, 171 companies were privatised, averaging 20–25 a year. Total proceeds were LE 15.45 billion. The pace declined sharply in 2001, when there were only 13 privatisations with proceeds of LE 1.1 billion. Proceeds fell further to LE 51.2 million in 2002 and LE 114 million in 2003. See Egypt: Business Law Handbook, Vol. 1 (Washington, DC, International Business Publications, 2006), p. 138. 38. Richard H. Sines, ‘Final evaluation of USAID project to transform the Federation of Egyptian Industries into a “private” industrial association compatible with a more open and market-oriented economy: 1994 to 1999’, prepared for USAID (December 1999), p. 10. Available at http://pdf.usaid. gov/pdf_docs/pdabs077.pdf (accessed 3 March 2015). 39. CARANA Corporation, Privatization Coordination Support Unit, Report provided to USAID, ‘Privatization in Egypt, Quarterly Review’, April – June, 2002, p. 9. Available at http://www1.aucegypt.edu/src/wsite1/Pdfs/ Privatization%20in%20Egypt%20-Quarterly%20Review.pdf (accessed 1 February 2014). 40. CIPE assisted USAID/Cairo and the Federation of Egyptian Industries under a Cooperative Agreement to help transform FEI into a voluntary membership type of business association as opposed to a parastatal with mandatory membership. This was subsumed within USAID’s overall reform package with the Mubarak regime. USAID resources were allocated towards private sector decision makers. This decision was conveyed to FEI’s board of directors by the USAID mission director and by the US Ambassador in 1995. See Sines, ‘Final evaluation’. CIPE and other US federally-funded ‘NGOs’ have an interesting history. Before the 1980s, the CIA secretly funded and sometimes created fake private, non-governmental organisations – for propaganda or as cover for covert operations. Those included, for example, France’s anti-communist trade union

NOTES

41.

42.

43.

44. 45. 46.

47.

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federation, Force Ouvrie`re, which worked with legendary labour activist and CIA operative Irving Brown. The Ford Foundation was also used prior to the late 1960s to channel federal funding to CIA favourites. When their covers were blown during the Vietnam War era, an alternative was created. Working with a bipartisan majority of Congress, the Reagan administration created the National Endowment for Democracy (NED) in 1983. NED, by law, works mostly through three new institutions described as ‘core grantees’: the Center for International Private Enterprise, the International Republican Institute (IRI), the National Democratic Institute (NDI) and the AFL-CIO’s Free Trade Union Institute. The latter also had a long history of working closely with the CIA. Steve Weissman and Frank Browning, ‘The “NGOs” that spooked Egypt’, Salon, 7 April 2012. Available at http://www.salon.com/2012/04/07/the_ngos_ that_spooked_egypt/singleton/ (accessed 1 February 2014). Similarly, Freedom House has admitted after a Financial Times scoop (2006) that it was ‘selected by the State Department to receive funding for clandestine activities inside Iran’. Guy Dinmore, ‘Bush enters Iran “freedom” debate’, Financial Times, 31 March 2006. Available at http://www.ft.com/intl/cms/s/0/48d26298-c052-11da-939f0000779e2340.html#axzz2Moty5YBw (accessed 1 February 2014). Jason Hickel, ‘Neoliberal Egypt: the hijacked revolution’, Al-Jazeera, 29 March 2012. Available at http://www.aljazeera.com/indepth/opinion/2012/ 03/201232784226830522.html. Robert H. Pelletreau, ‘Developments in the Middle East’, hearing before the Committee on International Relations, House of Representatives, One Hundred Fourth Congress, Second Session, 12 June 1996. Available at http://www. archive.org/stream/developmentsinmi1996unit/developmentsinmi1996unit_ djvu.txt (accessed 1 February 2014). In fact, in the early 1990s, policy studies had lamented that politics was consistently prioritised by the US Embassy in Cairo. See Denis Sullivan, ‘American economic aid to Egypt, 1975– 86: political and bureaucratic struggles over aid disbursement and development choices’, PhD dissertation, University of Michigan, 1987 and ‘Bureaucracy and foreign aid in Egypt: the primacy of politics’, in Ibrahim M. Oweiss (ed.), The Political Economy of Contemporary Egypt (Washington, DC, Center for Contemporary Arab Studies, Georgetown University, 1990), pp. 125– 59. Egypt: Business Law Handbook, Vol. 1, p. 138. World Bank Database of Privatization. Available at http://go.worldbank.org/ W1ET8RG1Q0 (accessed 1 February 2014). See Egyptian Ministry of Investments webpage. Available at http://www.inves tment.gov.eg/ar/EconomicIndicators/Pages/invind.aspx (accessed 1 February 2014). Interview, al-Naggar, 2012. Also see, Galal Amin interview in ‘Issam Rif‘at and Muhammad Ibrahim, ‘Qadaya Misr al-sakhina,’ Al-Ahram al-Iqtisadi, 16 June 2003. Available at http://economic.ahram.org.eg/Ahram/2003/6/16/ INVE1.HTM (accessed 1 February 2014).

286

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48. Samir Amir, ‘Democracy and national strategy in the periphery’, Third World Quarterly, 9/4 (October 1987), pp. 1129 –56, pp. 1137 and 1150. 49. Ibid. 50. Amin, Tanmiya am Taba‘iyya Iqtisadiyya wa Thaqafiyya, p. 15. 51. Ibid. 52. For literature on asset stripping that accompanies privatisation, see John Nellis and Sunita Kikeri, ‘Privatisation in competitive sectors: the record to date’, World Bank Policy Research Working Paper No. 2860’, June 2002; Nancy Birdsall and John Nellis, ‘Winners and losers: assessing the distributional impact of privatization’, World Development 31/10 (2003), pp. 1617–33; Gerard Roland (ed.), Privatization, Successes and Failures (New York, Colombia University Press, 2008). 53. CARANA Corporation, p. 8. 54. World Bank Database of Privatization. Available at http://go.worldbank.org/ W1ET8RG1Q0 (accessed 1 February 2014). 55. Tamir Moustafa, ‘Law versus the state: the judicialization of politics in Egypt,’ Law and Social Inquiry 28/4 (Autumn 2003), pp. 883 – 930. 56. Moreover, unsecured loans (about LE 175 billion) were given to connected elite – some of whom are Egyptian – American – and were not repaid. Farouk argues that financial reforms transformed ‘corrupt administration into the administration of corruption’ ( fasad idara ila idarat fasad). (More in Chapter 2.) ‘Abd el-Khalek Farouq, Iqtisadiyyat al-Fasad fi Misr (Cairo, Dar al-Shurouq al-Dawliyya, 2011) and Al-Qawanin Al-Iqtisadiyya al-Mufsida, Waraqat Siyasat ‘Amma (Cairo, Nile Center for Economic and Strategic Studies, 2011). 57. Sullivan, ‘American Economic Aid to Egypt, 1975– 86’. 58. The ‘world consensus’ deemed that Egypt would be ‘among the fastest growing’ in the future if it continued the programme of neoliberal economic reforms. ‘Yet the growing world consensus supports the view that if Egypt, even just mechanically, without much fanatical fervor for the free market, took policy actions to position itself among the top 20 countries of the world on the Heritage Index (with Bahrain, Czech Republic, and USA and others), Egypt could in time be among the fastest growing developing countries.’ The citation refers to the Heritage Foundation’s Economic Freedom Index, which ranked Egypt as ‘mostly unfree’ between 1995 and 1999. Charles Montrie, Charles Diamond, Abdelhamid Mahboob and Carolyn Youssef, Program Evaluation Study Plan for the USAID Program and Its Impact on Egypt Policy Reform Programs, 25 February 1999, pp. 12– 14, 20. Available at http://pdf.us aid.gov/pdf_docs/Pdabr401.pdf (accessed 2 February 2015). 59. ‘Sharm el-Sheikh Arab-American summit glimpse of hope for better’, Kuwait News Agency (KUNA), 6 March 2003. Available at http://www.kuna.net.kw/ ArticleDetails.aspx?id¼1350778&language ¼ en (accessed 1 February 2014). G. Amin interview in Rif‘at, ‘Qadaya Misr al-sakhina’. 60. Scobey, CABLE 09CAIRO353.

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61. See Bell, ‘Audit of USAID/Egypt’s Democracy and Governance Activities’, pp. 1 – 4. Margaret Scobey, US Ambassador to Egypt, was aware that ‘[t]he GoE believes, correctly, that the US exceeded the terms of the agreement reached in 2004 over how this [direct grants D & G] program would operate’. See Scobey, CABLE 09CAIRO353. 62. Ibid. 63. Ibid. 64. America in Arabic, ‘Bi-Tariqa aqrab li ghasil al-amwal, WikiLeaks: Clinton Mawwalat Munazzamat Misriyya’. Aljazeera, 10 February 2011. Available at http://www.aljazeera.net/NR/exeres/5D68B47B-2C8C-4A70-A872-15F3 619CE04F.htm?GoogleStatID¼ 9 (accessed 1 February 2014). 65. Jon B. Alterman argues that historically, the US faced many challenges in its aid relationship with Egypt. Most of these related to the complications arising from the US’s attempt to link economic aid with political objectives. Jon B. Alterman, Egypt and American Foreign Assistance 1952– 1956: Hopes Dashed (New York, Palgrave Macmillan, 2002). 66. Dina Shehata, interview, 2012. USAID’s website affirms that the shift occurred: ‘USAID’s work in the 1970s focused on rehabilitating the country’s deteriorating infrastructure, including ports and canals, water and sewage, power, telecommunications, and grain storage systems. The Agency has since expanded into many different sectors in partnership with the Egyptian people – including agriculture, health, education, and economic growth’. USAID, ‘History’. Available at http://www.usaid.gov/egypt/history (accessed 1 February 2014). 67. Samiha ‘Abd el-Halim, ‘American aid and the politics of the carrot and the stick’, Akhbar Misr, 20 October 2013. Available at http://www.egynews.net/ wps/portal/profiles?params¼260003 (accessed 1 February 2014). 68. Alongside economic aid, the main military dimension of aid re-oriented the Egyptian military onto a peace footing with Israel. US Government Accountability Office, ‘State and DOD need to assess how the foreign military financing program for Egypt achieves US foreign policy and security goals’, GAO-06-437, 11 April 2006. Available at http://www.gao.gov/products/GAO06-437 (accessed 1 February 2014). In addition, military aid granted the Egyptian military the budgetary leeway (and freedom) to pursue non-military (economic) interests of its own away from the prying eyes of any possible popular oversight (for example, from parliament). Marshall and Stacher, ‘Egypt’s generals and transnational capital’. 69. Interviews, 2012. 70. Quoted in Muhammad Faris, ‘Khubara’ siyasa: Misr admanat al-husul ‘ala alma‘ounat’, Al-Masryalyoum, 23 March 2012. Available at http://www.almas ryalyoum.com/node/729106 (accessed 1 February 2014). The attitudes of these critics follow those of prior intellectuals who had vociferously objected to aid. See Morsy, American Aid to Egypt. This book was followed by another by the same author a year later, in which she argued that aid cultivated an

288

71. 72. 73.

74. 75. 76. 77.

78.

79. 80.

81. 82. 83.

84.

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54 –60

intentional discursive dichotomy between an ‘extremist’ Nasser versus a ‘moderate’ Sadat. Soheir A. Morsy, American Aid to Egypt: Between ‘Nasserite Extremism’ and ‘Sadatian Moderation’ (Cairo, Al-Muwajaha, Lajnat al-Difa‘ ‘an al-Thaqafa al-Qawmiyya, 1986). Interview, Ghada Shahbandar, 2012. Ministry of Investment, Egypt, website. Available at http://www.investment. gov.eg/en/Investment/Pages/default.aspx (accessed 1 February 2014). The ministry’s implementation of mabade’ al-hawkama (governance principles) created a system of oversight and accountability within the agency. It also held workshops to spread thaqafat al-hawkama (governance culture). General Authority for Investments and Free Zones (GAFI), Annual Report Fiscal Year 2008– 2009 (2008 –9), pp. 17– 8. Available from http://www.gafi.gov.eg/en/ (accessed 2 February 2015). Ibid., pp. 39, 69. For the US evaluation, see Montrie et al., Program Evaluation Study, p. 14. Ibid., p. 7. Ministry of Investments, Annual Report, p. 54. See Bedaya’s website. Available at http://www.gafisme-bedaya.com/index.php/ ar and http://www.gafisme-bedaya.com/index.php/ar (both accessed 1 February 2014; no longer available). Interview, Ahmed al-Sayyed al-Naggar, 2012. Also see Ahmed al-Sayyed alNaggar, Al-Inhiyar al-Iqtisadi fi ‘Asr Mubarak: Haqa’iq al-Fasad wa al-Batala wa al-Ghala’ wa al-Rukoud wa al-Duyoun (Cairo, Al-Majlis al-A‘la li alThaqafa, 2005, 2010, 2012). Ibid. 2011, p. 58. See Chapter 2 for export statistics and unemployment. The statistics of the Bureau for Statistics and Mobilization were also closer to US trade statistics. See al-Naggar, ‘Al-Khaskhasa. Qira’a naqdiyya li al-siyasa wa li safaqat atharat al-jadal’, in Al-Ittijahat al-Iqtisadiyya al-Istratijiyya (Cairo: Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2006), pp. 303 – 15 and Al-Inhiyar al-Iqtisadi [. . .]. Hazem el-Beblawi, Araba‘at Shuhour fi Qafas al-Hukuma (Cairo: Dar alShurouq, 2012), p. 71. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 249. CAPMAS, ‘Exports by sector, 2006’. Available at http://www.capmas.gov.eg/ database.aspx?access¼denied&parentid ¼ 2375 (accessed 1 February 2014). Index Mundi, ‘Value of oil exports, Egypt’, citing IMF World Economic Outlook 2011 for Egypt. Available at http://www.indexmundi.com/egypt/ oil_exports.html (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 253 – 4. GNP measures all goods and services produced in Egypt whether its producers are local or foreign. GDP, on the other hand, takes GNP, adds the estimated value of goods by Egyptian firms outside of Egypt plus remittances and subtracts the value of goods produced by foreign entities domestically. To get an accurate picture,

NOTES

85. 86.

87.

88. 89.

90. 91.

92.

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GNP must be adjusted by a deflator to make up for differences in purchasing power parity (PPP) with the rest of the world. The difference between them is foreign capital exiting Egypt. In 2010, that difference was equivalent to more than 17 per cent of national production; in 2009, it was more than 14 per cent. In contrast, foreign direct investment (FDI) only represented, on average, 40 per cent of the monies extracted from Egypt. Most of these FDIs were actually exchanges in paper assets and not real investments in constructing new physical productive assets on the ground. Ibid., pp. 249 – 53. For a detailed discussion of this issue see ibid., pp. 253–6, 279, 283 – 7. Also see el-Beblawi, Araba‘at Shuhour fi Qafas al-Hukuma, p. 93. The Center for Project Evaluation and Macroeconomic Analysis (PEMA). Available at http://www.pema.gov.eg/ (accessed 13 April 2013; no longer available). My attempt to gain access to their published reports (which are listed and summarised online) was initially accepted over the phone by a receptionist, only to be rejected categorically when the person in charge of research, Marianne Edward, informed me that their research is only for the Ministry of Finance and the Ministry of Investments. James V. Grimaldi and Robert O’Harrow Jr., ‘In Egypt, corruption cases had an American root’, The Washington Post, 20 October 2011. Available at http:// www.washingtonpost.com/investigations/in-egypt-corruption-had-anamerican-root/2011/10/07/gIQAApWoyL_story.html (accessed 1 February 2014). Montrie et al., Program Evaluation Study, pp. 9 – 10. See, for instance, this conclusion from an evaluation of the impact of USAID: ‘This is not to give short shrift to investment in human capital or basic infrastructure. However, the evidence is less compelling that assistance in these areas has its intended impact, particularly if the country has not already adopted free trade and market-oriented economic policies’. Ibid., p. 9. Sines, ‘Final evaluation’, p. 8. These objections to aid are reiterated in publications by the Egyptian Democratic Socialist Party, Al-Tajammu‘ Party and the Revolutionary Egyptians and by critical economists such as ‘Abdel Khalek Farouk and Ahmed al-Sayyed al-Naggar. One version or another of these specific criticisms has been published (repeatedly) in the widely-distributed, Al-Ahram alIqtisadi. See the following sample, ‘Abdel Khalek Farouk, Iqtisadiyyat al-Fasad fi Misr: Kayf Jara Ifsad Misr wa al-Masriyyeen (1974 – 2010), (Cairo, Maktabat al-Shurouk al-Dawliyya, 2011); al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012); and ‘Adel ‘Ammer, ‘Qimat al-ma‘ouna al-Amrikiyya li-Misr’, Al-Wa‘y al‘Arabi, 5 December 2012. Available at http://elw3yalarabi.org/modules.php? name¼News&file ¼ article&sid ¼ 13059 (accessed 1 February 2014). See also ‘Isam Rif‘at, ‘Al-Ma‘ouna al-Amrikiyya wa ifsad al-watan’, Al-Ahram, 15 February 2012. Available at http://www.ahram.org.eg/WriterArticles/183/ 2012/20.aspx (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012). More on this topic in Chapter 2.

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93. Nathan Associates Inc., ‘Egypt: economic performance assessment’, prepared for USAID, April 2008. Available at http://egateg.usaid.gov/sites/default/ files/Egypt_Economic_Performance_Assessment.pdf (accessed 1 February 2014). Another audit of a USAID programme to modernise Egypt’s financial market concluded that while the market had improved, the growth was ‘not clearly measureable or attributable’ to the aid efforts. Nathan Associates Inc., reporting for US Office of the Inspector General, ‘Audit of USAID/Egypt’s Financial Services Project’, Audit Report No. 6-263-10-002, 30 November 2009. Available at http://oig.usaid.gov/sites/default/files/audit-reports/6-26310-002-p.pdf (accessed 1 February 2014). 94. Denis Sullivan, ‘American aid to Egypt, 1975 – 96: peace without development’, Middle East Policy (October 1996), pp. 36 – 49. Quoted in Montrie et al., Program Evaluation Study, p. 6. 95. The proportions approach compares the relative size of aid and economic aggregates such as GDP, imports and investment. These measures indicate the relative importance, but not impact, of aid flows. The correlation approach tries to deduce cause and effect by comparing aid with the changes in economic indicators like investment, exports, agricultural production and so forth. This approach relies on a post hoc ergo propter hoc (after this, therefore because of this) assumption, which is not always valid. The World Bank generally uses this type of analysis. Finally, the multiplier model approach evaluates the effect of external aid using input/output or the computable general equilibrium (CGE) models of the country. This approach would not work for Egypt because of the relatively small size of aid in relation to the formal and informal Egyptian economy, variety of programmes and available data quality. Ibid., pp. 4 – 6. 96. See Scobey, Cable CAIRO353. 97. CARANA Corporation. 98. Ibid., my italics, to emphasise correlation, not causation. 99. Ibid. 100. Interview with al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012). Also see, alNaggar, Al-Inhiyar al-Iqtisadi fi ‘Asr Mubarak, pp. 179 – 82, 203. 101. Hazem el-Beblawi, interview, 2012. Also see el-Beblawi, Arba‘at Shuhour fi Qafas al-Hukumah, pp. 60–2. 102. Safaa Abdoun, ‘Workers’ demos intensify during first half of 2011’, Daily News Egypt, 3 July 2011. Available at http://www.dailynewsegypt.com/2011/07/03/ workers-demos-intensify-during-first-half-of-2011/ (accessed 1 February 2014). Also see, Awlad al-Ard original reports, MENA Solidarity Network, ‘Egypt: strike statistics for 2009– 2011’, 9 August 2011. Available at http:// menasolidaritynetwork.com/2011/08/09/egypt-strike-statistics-for-20092011/ (accessed 1 February 2014). For more on labour activity, see Egypt Worker Solidarity Organization. Available at http://www.egyptworkersol idarity.org/ (accessed 1 February 2014).

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103. ‘Abd el-Khalek Farouk, Iqtisadiyyat al-Fasad fi Misr. Shaima’ ‘Issa, “Dr. ‘Abd el-Khalek Farouk li-“Muheet”: Mukhattat li-tafkik Misr. LE 100 milion manhouba bi “al-qanun”, Moheet, September 22, 2012. Available at http:// moheet.com/news/newdetails/451207/1/%D8%AF.%D8%B9%D8%A8% D8%AF-%D8%A7%D9%84%D8%AE%D8%A7%D9%84%D9%82-% D9%81%D8%A7%D8%B1%D9%88%D9%82-%D9%84%D9%80% D9%85%D8%AD%D9%8A%D8%B7-%D9%85%D8%AE%D8%B7% D8%B7-%D9%84%D8%AA%D9%81%D9%83%D9%8A%D9%83-% D9%85%D8%B5.html#.Uu2lnT1dWSo (Accessed 1 February 2014). Also see, ‘Isam Rif‘at, ‘Al-Ma‘ouna al-Amrikiyya wa ifsad al-watan’. The primary stipulation by USAID that American contractors be used was also a source of criticisms. Critics charged that they reduced programme efficiency. See The American University in Cairo, ‘Whither economic aid to Egypt?’, 23 September 2012. Available at http://www.aucegypt.edu/GAPP/casar/Pages/ Whither-Economic-Aid-to-Egypt.aspx (accessed 18 January 2015). 104. See, for instance the MERC programme by USAID that handles joint research and partnerships between Egypt and Israel, the original two states. However, the programme has expanded to other countries in the region. See The Middle East Regional Cooperation Program (MERC), USAID. Available at http:// www.usaid.gov/sites/default/files/documents/1883/MERC%202013%20 pre-proposal%20instructions.pdf (accessed 1 February 2014). For Egyptian critiques of these types of societal interchange, see Ihab Shawqi, ‘Al-Tatbi‘ alMisri wa al-Suhyouni ba‘d thawrat Yanayer’, in Rif ‘at Sayyed Ahmed (ed.), Al-Muqawama 4 (April 2012), pp. 25– 56. 105. CARANA Corporation, p. 6. 106. Ibid, p. 12. 107. Farouk, Al-Qawanin al-Iqtisadiyya al-Mufsida. 108. Ahmed al-Sayyed al-Naggar, ‘Mas’oulat Misr bi-sunduq al-naqd al-dawli liAl-Ahram: Na‘am.. nahnu aydan natahammal mas’ouliyyat fasad alkhaskhasa’, Al-Ahram, 4 October 2011. Available at http://digital.ahram. org.eg/articles.aspx?Serial¼657471&eid ¼ 46 (accessed 1 February 2014). 109. Bell, ‘Audit of USAID/Egypt’s Democracy and Governance Activities’, pp. 3, 9, 41 – 3. 110. It is estimated that private boxes generate LE 100 billion per year, equal to about 20 per cent of the annual fiscal budget for Egypt. The budget deficit on average was only LE 40 billion larger than the revenues streaming into private boxes. All monies within lay beyond the supervision of the Central Accounting Bureau. ‘Abd el-Hafiz al-Sawi, ‘Muwazanat Misr tantazir miliarat al-sanadiq al-khassah’. Aljazeera, 15 May 2012. Available at http://www.aljazeera.net/ebusiness/pages/ d04bcbe7-ad99-429e-ae7d-eee8c5b0197e (accessed 1 February 2014). 111. Hazem el-Beblawi, interview, 2012. See also el-Beblawi, Arba‘at Shuhour fi Qafas al-Hukumah, pp. 130– 6. 112. See Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (New York, Bloomsbury Press, 2008), for an extensive

292

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114. 115. 116.

117. 118. 119.

120. 121.

122. 123. 124.

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history of similar (corrupting) effects from the imposition of neoliberal reforms in developing countries. Consciousness of the possibilities for corruption has prompted the transparency movement in IFIs, including Transparency International, the World Bank and the IMF. ‘Abd el-Khalek Farouk, Iqtisadiyyat al-Fasad fi Misr. For more on Sinai, see Chapter 3. For a discussion of the Toshka Development Project, see Timothy Mitchell, ‘No factories, no problems: the logic of neo-liberalism in Egypt’, Review of African Political Economy 26/82 (December 1999), pp. 455 – 68. GAFI, Annual Report FY 2008– 2009, p. 58. Hazem el-Beblawi and al-Naggar, interviews, 2012. The strategic investor approach produced privatised companies that were profitable at some time after their privatisation. In contrast, the public offering on both the Cairo Stock Exchange and the sale to employee stock associations approaches produced companies with ‘mixed results’. An unidentified number of companies performed ‘poorly’ which necessitated ‘government intervention and indefinite suspension of the firms’ board of directors’. These assessments are according to the report, CARANA Corporation, pp. 10–11, 17. Al-Naggar, interview, 2012. Al-Naggar, ‘Al-Taba‘iyya’. By 2002, foreign investors accounted for 11 out of 29 privatisations sold to strategic investors (CARANA Corporation, p. 11). Sales to strategic investors and privatisations in general accelerated after the Nazif government was appointed in 2004. The State Department applauded ‘the installation of the 2004 Egyptian cabinet and the 2005 presidential election, the Government of Egypt began a new reform movement, following a stalled economic reform program begun in 1991, but moribund since the mid-1990s. Since 2004, the cabinet economic team has simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatisations of public enterprises and implemented economic legislation designed to foster private sector-driven economic growth and improve Egypt’s competitiveness’. US Department of State, 19 March 2012. Available at http://www.state.gov/ou tofdate/bgn/egypt/196332.htm (accessed 1 February 2014). Al-Naggar, interview, 2012. Zainab Fathi Abu el-‘Ela, ‘Malaff al-Marajil al-Bukhariyya amam al-na’ib al‘am ba‘d al-khaskhasa wa al-tasfiya’. Al-Ahram al-Iqtisadi, 11 April 2011. Available at http://digital.ahram.org.eg/articles.aspx?Serial¼ 469845& eid ¼ 385 (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 193 – 8. Also see, CARANA Corporation, p. 18. Abu el-‘Ela, ‘Malaff al-Marajil al-Bukhariyya [. . .]. Mustafa al-Naggar, ‘Mudir al-Marajil al-Bukhariyya al-sabiq yutalib bi sur‘at tasallum al-dawla li-al-sharika’, Al Youm al-Sabi‘, 6 October 2011. Available at http://m.youm7.com/News.asp?NewsID¼507037 (accessed 1 February 2014).

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125. Interviews with Hazem el-Beblawi, and Ahmed al-Sayyed al-Naggar, AlInhiyar al-Iqtisadi [. . .] (2012). 126. Isik Ozel, ‘Beyond the orthodox paradox: the breakup of state-business coalitions in 1980s Turkey’, Journal of International Affairs 57/1 (October 2003), pp. 97–112; Boyan Belev, Forcing Freedom: Political Control of Privatization and Economic Opening in Egypt and Tunisia (Lanham, MD, University Press of America, 2001). 127. Simon Springer, ‘Violence, democracy, and neoliberal “order”: the contestation of public space in post transitional Cambodia’, Annals of the Association of American Geographers 99/1 (2009), pp. 138– 62. 128. Sheila Carapico, ‘Foreign aid for promoting democracy in the Arab World’, Middle East Journal 56/3 (Summer 2002), pp. 379– 95, p. 385n25. 129. Sanjay Kumar makes a distinction between ‘civil society’ and ‘civil society in society’ in order to unpack the European normative ideal that is applied as the standard by which the rest of the world is judged, even though the different contexts render the ideal meaningless. Sanjay Kumar, ‘Civil society in society’, Economic and Political Weekly 35/31 (29 July– 4 August 2000), pp. 2776–9. 130. Soheir A. Morsy, ‘Al-Mujtama‘ al-madani: Bayn al-qudsiyya al-liberaliyya wa al-taswiq al-liberali li al-dimoqratiyya’, in Gamal ‘Abd el-Fattah (ed.), AlTamwil al-Ajnabi wa Munathamat al-Mujtama‘ al-Madani, (Cairo, Al-Rabita al-Sha‘biyya li Muqawamat al-Imberyaliyya wa al-Suhyouniyya, 2004). 131. Ibid. 132. Ibid., p. 24. 133. Ibid., p. 36. 134. Ibrahim ‘Awad, ‘The external relations of the Arab Human Rights Movement’, Arab Studies Quarterly 19/1 (Winter 1997), pp. 59 – 75. The Egyptian Organization for Human Rights is one such organisation that received funding indirectly through an intermediary Moroccan NGO. See WikiLeaks, Ambassador Margaret Scobey, 09CAIRO748, 30 April 2009. Available at http://wikileaks.org/cable/2009/04/09STATE38619.html (accessed 1 February 2014). 135. See ibid. 136. Ghada Shahbandar is a founding member of the Egyptian Organization for Human Rights. She was named as one of the civil society activists who either visited and ‘gave information’ to US Ambassador Margaret Scobey or who received funding from the United States. See WikiLeaks Cables 94108 and 32509. Available at http://www.wikileaks-forum.com/index.php/topic, 6414.0.html?PHPSESSID¼67b0ed2a77ae40f8e8c077ca41617841 (accessed 1 February 2014). 137. Ghada Shahbandar, interview, 2012. 138. Bell, ‘Audit of USAID/Egypt’s Democracy and Governance Activities’, p. 1. 139. The World Bank considered Egypt a model for other states undergoing transitions to free markets and trying to attract investments. It praised the experiment of building a collective of investment services in Egypt and stated

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140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. 151. 152. 153.

154.

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that it should be studied by other countries and followed. The World Bank’s Ease of Doing Business Report, UNCTAD’s Indicator for ‘Performance of Foreign Direct Investments’, and the World Economic Conference ‘Competitiveness’ Indicator all gave Egypt high marks. GAFI. Annual Report FY 2008– 2009, pp. 57, 64. Sines, ‘Final evaluation’, pp. 5 – 7. Ibid., pp. v, 12, 14, 18, 22, 34fn, 39. Ibid., p. viii. Ibid., p. 3. Ibid., pp. iv, 55. Ibid., pp. vii – viii. Emphasis original. Ibid, pp. iii, vi. Ibid, p. iii. Ibid., pp. 7 – 9. ‘Isam Rif‘at, ‘Al-Ma‘ouna al-Amrikiyya wa ifsad al-watan’. Sines, ‘Final evaluation’, pp. iv. Ibid, p. v. Ibid, pp. v-vi. National Endowment for Democracy (NED), 2000 Annual Report. Available at http://www.ned.org/docs/annual/2000AnnualReport.pdf (2000: 59) (accessed 1 February 2014). For example, the 2009 NED Annual Report lists CIPE as a top recipient of grants: US$ 750,497 ‘[t]o promote democratic governance in Egyptian institutions and facilitate dialogue on democratic governance principles among the private sector, public sector, and civil society in Egypt. CIPE will conduct workshops on democratic governance and produce a democratic governance toolkit in Arabic; work with universities to incorporate CIPE’s Development Institute into their curriculum; and conduct workshops at the governorate level to promote corporate citizenship’; US$ 207,805 ‘[t]o build consensus on the reform priorities of Egypt’s business community through the National Business Agenda process and engage Egyptian policymakers to effect legislative and/or regulatory change based on the agenda’s recommendations. CIPE will assist EJB in mobilising its members to voice their concerns and priorities through an updated NBA and developing a legislative review of specific reforms in the transportation and logistics sector’ and US$ 188,600 ‘[t]o engage civil society organisations to participate in the democratic process by strengthening their capacity to advocate for free market legislative reform on behalf of their members. FEDA will submit to Parliament legislation to expand street vendor rights and make recommendations regarding existing draft laws on bankruptcy, market exit rules, decentralisation, and local administration currently being circulated in Parliament.’ For other annual reports of democratisation funding by NED see http://www.ned.org/where-we-work/middle-east-and-northern-africa/egypt (accessed 1 February 2014). ‘Issam Rif‘at, ‘Al-Ma‘ouna al-Amrikiyya wa ifsad al-watan’.

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155. See Helmy’s biography at http://www.amcham.org.eg/operation/doorknock/ dk2007/Profiles.asp (accessed 1 February 2014). 156. Grimaldi and O’Harrow Jr, ‘In Egypt, corruption cases had an American root’. 157. Annual lists of recipients of aid can be found at this website for NED: http:// www.ned.org/where-we-work/middle-east-and-northern-africa/egypt (accessed 1 February 2014).

Chapter 2 Privatisation and ‘Peace’ by Partner Allies: Alignment and Oppositional Critiques 1. USAID, ‘Egypt’. Available at http://www.usaid.gov/egypt/economic-growthand-trade (accessed 7 March 2015). 2. During the 1973 (Yom Kippur) war, the regional military balance of power was less favourable towards Israel. The US was extremely concerned about this turn of events, culminating in heavy involvement by Secretary of State Henry Kissinger in the negotiations for a peace agreement and the offer of aid to both states. This heavy involvement continued through the aid relationship. 3. William I. Robinson, Promoting Polyarchy: Globalization, US Intervention, and Hegemony (Cambridge, Cambridge University Press, 1996). 4. The ability of the neoliberal elite to do so is posited in Gramscian IR theory. See ibid., p. 625. Also see, Robert W. Cox, ‘Towards a post-hegemonic conceptualization of world order: reflections on the relevancy of Ibn Khaldun’, in James N. Rosenau and Ernst-Otto Czempiel (eds), Governance without Government: Order and Change in World Politics (Cambridge, Cambridge University Press, 1992) and ‘Multilateralism and world order’, Review of International Studies 18/2 (1992), pp. 161– 80, p. 167. 5. Lisa Anderson, ‘Arab democracy: dismal prospects’, World Policy Journal 18/3 (Fall 2001), pp. 53– 60; Bruce K. Rutherford, Egypt after Mubarak: Liberalism, Islam, and Democracy in the Arab World (Princeton, NJ, Princeton University Press, 2008) and Eva Bellin, ‘The robustness of authoritarianism in the Middle East: exceptionalism in comparative perspective’, Comparative Politics 36/2 (January 2004), pp. 139– 57. 6. Susanne Soederberg, ‘Grafting stability onto globalisation? Deconstructing the IMF’s recent bid for transparency’, Third World Quarterly 22/5 (October 2001), pp. 849 – 64. 7. Alex Jeffrey, ‘The politics of “democratization”: lessons from Bosnia and Iraq’, Review of International Political Economy 14/3 (August 2007), pp. 444 – 66. 8. Alfred W. McCoy, Policing America’s Empire: The United States, the Philippines, and the Rise of the Surveillance State (Madison, WI, University of Wisconsin Press, 2009). 9. Galal Amin, Masr wal Masreyoun fi ‘Ahd Mubarak, 1981–2008 (Cairo, Dar Merit, 2009). 10. Ibid.

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11. A 2009 audit by the US Inspector General of USAID’s Democracy and Governance activities in Egypt explicitly states the rationality underlying aid: ‘The US Government works strategically with the Government of Egypt to promote peace and regional stability, counter extremism and terrorism, and create an environment conducive to economic reforms’. Jacqueline Bell, Regional Inspector General/Cairo, ‘Audit of USAID/Egypt’s Democracy and Governance Activities (Audit Report No. 6-263-10-001-P)’, 27 October 2009, p. 1. Available at http://usatoday30.usatoday.com/news/pdf/usaidaudit. pdf (accessed 19 January 2015). 12. Larry Diamond, in an interview with Jonathan Masters for the Council on Foreign Relations, characterised Egypt as ‘[. . .] overwhelmingly the most important country in the Arab world’. He also described the attempt at reconciling the American idealism of democracy that was announced in President Obama’s 2009 Cairo speech with protecting the national (US) interest as an ‘existential challenge, because our interests in the region are so profound’. Larry Diamond, ‘Democracy promotion and the Obama doctrine’, 8 April 2011. Available at http://www.cfr.org/world/democracy-promotionobama-doctrine/p24621 (accessed 10 February 2015). 13. David H. Bearce, ‘Why foreign aid may be less effective at promoting economic growth in more democratic countries’, paper presented at the annual meeting of the ISA’s 50th Annual Convention Exploring the Past, Anticipating the Future, New York Marriott Marquis, New York, 15 February 2009. Available at http://citation.allacademic.com/meta/p311285_index.html (accessed 1 February 2014). 14. The Peace Treaty had incorporated Israeli President Yitzhak Navon’s requirement that oil sales in particular, and economic normalisation (a full peace) in general, would be compensation for the ‘loss’ of Sinai. United Press International (UPI), ‘Israel-Egypt peace plan is disclosed’, St Petersburg Times, 20 August 1975. Available at http://news.google.com/newspapers?nid¼888& dat ¼ 19750820&id ¼ C3VIAAAAIBAJ&sjid ¼ Vl8DAAAAIBAJ&pg ¼ 2450,3138489 (accessed 1 February 2014). See also Ibrahim Nawwar, ‘Al‘Ilaqat al-Misriyya al-Isra’iliyya: al-Itar, wa al-nata’ij, ba‘d ‘am min al-tatbi‘’, Al-Ahram, 1 July 1981. Available at http://digital.ahram.org.eg/articles.aspx? Serial¼215095&eid ¼ 13 (accessed 2 February 2014). 15. Afaf Lutfi al-Sayyed Marsot, A History of Egypt: From the Arab Conquest to the Present, (Cambridge and New York, Cambridge University Press, 2007), p. 158. 16. Ihab Shawqi, ‘Al-Tatbi‘ al-Misri al-Suhyouni ba‘d thawrat Yanayer’, in Rif‘at Sayyed Ahmed (ed.), Al-Muqawama, monthly publication (Cairo: Markaz Yafa li-l-Dirasat al-Istratijiyya, various dates) 4 April 2012, pp. 25 – 56, pp. 26 – 8. 17. The tally of US aid to Egypt starts from 1946. Sara Noureddine, ‘Markaz alDirasat al-Iqtisadiyya: Nizam Mubarak ahdar 185 miliar dolar min amwal alma‘ounat al-ajnabiyya’, Al-Masry al-Yawm, 19 June 2011. Available at http:// www.almasryalyoum.com/node/469588 (accessed 1 February 2014). See also

NOTES

18.

19.

20. 21.

22.

23.

24. 25.

26.

27.

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Salah Gouda, ‘Al-Ma‘ouna al-Amrikiyya’, Mudawwinat Mubashir, 2 August 2012. Available at http://blogs.mubasher.info/%D8%A7%D9%84%D8%AE %D8%A8%D8%B1%D8%A7%D8%A1/%D8%AF%D9%83%D8%AA% D9%88%D8%B1-%D8%B5%D9%84%D8%A7%D8%AD-%D8%AC% D9%88%D8%AF%D9%87/%D8%A7%D9%84%D9%85%D8%B9%D9% 88%D9%86%D8%A9-%D8%A7%D9%84%D8%A3%D9%85%D8%B1% D9%8A%D9%83%D9%8A%D8%A9 (accessed 1 February 2014). Michael Barnett argues that Sadat used a statist sovereignty argument ‘punching through the normative envelope and was outside of Arabism looking in’. Barnett, however, does not acknowledge that Sadat’s approach was dictatorial not statist, as there was no consultation with the public, nor with state institutions. Michael Barnett, Dialogues in Arab Politics: Negotiations in Regional Order (New York, Columbia University Press, 1998). See also Jimmy Carter, Keeping Faith: Memoirs of a President (Toronto: Bantam Books, 1982), p. 389. Wahid ‘Abdel Magid, Nazra Jadida ila Camp David ba’d ‘Ishrin ‘Am: Namat al‘Ilaqa Bayn al-Mufawidin al-Misriyyeen Sahama fi Tawadu‘ Ada’ahum (Cairo: Dar wa Matabi‘ al-Mustaqbal, 1998). Samer Soliman, The Autumn of Dictatorship: Fiscal Crisis and Political Change in Egypt under Mubarak (Stanford, CA, Stanford University Press, 2011). Ray T. Donahue and Michael H. Prosser, Diplomatic Discourse: International Conflict at the United Nations – Addresses and Analysis (Greenwhich, CT and London, Ablex Publishing Corporation, 1997), p. 259. Yoav Stern, ‘Al-Ahram: Iran, Hamas, Hezbollah tried to overthrow Egypt’s Mubarak’, Haaretz, 19 April 2009. Available at http://www.haaretz.com/ print-edition/news/al-ahram-iran-hamas-hezbollah-tried-to-overthrow-egypts-mubarak-1.274331 (accessed 1 February 2014). Tim Lister, CNN, ‘US cables: Mubarak still a vital ally’, CNN, 28 January 2011. Available at http://www.cnn.com/2011/WORLD/africa/01/28/egypt. wikileaks.cables/ (accessed 1 February 2014). Ibid. Talk Nation Radio, ‘Egyptian police beat Americans and others’, 31 December 2009. Available at https://archive.org/details/BreakingNewsCairoEgyptianPoliceBeatGazaFreedomMarchersInStreets1 (accessed 1 February 2014). Barak Ravid, ‘WikiLeaks expose´: Israel tried to coordinate Gaza war with Abbas’, Haaretz, 28 November 2010. Available at http://www.haaretz.com/ news/diplomacy-defense/wikileaks-expose-israel-tried-to-coordinate-gazawar-with-abbas-1.327487 (accessed 1 February 2014). For the US report on the Egyptian ‘media campaign against US assistance’, see US Embassy Cable, 05CAIRO3164, WikiLeaks, 4 April 2005. Available at http ://wikileaks.ch/cable/2005/04/05CAIRO3164.html#par3 (accessed 1 February 2014). For the US embassy report on Egyptian political parties, the Kifaya movement and union opposition to assistance and to Israel, see US Embassy Cable, 05CAIRO5272, 11 July 2005, WikiLeaks, ‘Egypt: an Assessment of

298

28.

29.

30.

31.

32.

33.

34. 35. 36. 37. 38.

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Kifaya, the Popular Movement for Change’. Available at http://wikileaks.ch/ cable/2005/07/05CAIRO5272.html (accessed 1 February 2014). A May 2007 cable from the US embassy in Cairo released by WikiLeaks predicted that ‘[w]hoever Egypt’s next president is, he will inevitably be politically weaker than Mubarak [. . .] Among his first priorities will be to cement his position and build popular support. We can thus anticipate that the new president may sound an initial anti-American tone in his public rhetoric in an effort to prove his nationalist bona fides to the Egyptian street.’ US Embassy Cable, 07CAIRO1417, ‘Presidential Succession in Egypt’, May 2007. Available at http://wikileaks.org/cable/2007/05/07CAIRO1417.html (accessed 1 February 2014). Shimon Peres still perceived Mubarak as ‘committed to peace’ despite the strong rhetoric: Jewish Telegraphic Agency, ‘Mubarak is still committed to peace, despite strong rhetoric, says Peres’, 24 May 1990. Available at http:// www.jta.org/1990/05/24/archive/mubarak-is-still-committed-to-peace-despitestrong-rhetoric-says-peres (accessed 1 February 2014). David Leigh and James Ball, ‘Latest WikiLeaks cables reveal Israel’s fears and alliances’, The Guardian, 7 April 2011. Available at http://www.theguardian. com/world/2011/apr/07/israeli-wikileaks-cables-julian-assange (accessed 1 February 2014). US Embassy Cable, 09CAIRO326, 23 February 2009, WikiLeaks ‘Senator Lieberman’s February 17 meeting with Gamal Mubarak’. Available at http:// wikileaks.mediapart.fr/cable/2009/02/09CAIRO326.html (accessed 1 February 2014). David D. Kirkpatrick, ‘Secret recordings reveal Mubarak’s frank views on a range of subjects’, New York Times, 23 September 2013. Available at http:// www.nytimes.com/2013/09/23/world/middleeast/secret-recordings-revealmubaraks-frank-views-on-a-range-of-subjects.html?pagewanted¼ 1&_r ¼ 0&src ¼ recg (accessed 1 February 2014). For Mubarak’s role as intermediary, see US Embassy in Doha, 10DOHA71, 24 February 2010, WikiLeaks, ‘Senator Kerry’s meeting with Qatar’s prime minister’. Available at http://wikileaks.org/cable/2010/02/10DOHA71.html (accessed 1 February 2014). Antonio Gramsci, Selections from the Prison Notebooks [1971], ed. and trans. Quintin Hoare and Geoffrey Nowell Smith (New York, International Publishers, 2010), pp. 58– 9. For a definition and historical genesis of the concept of transformismo, please see note # 58 in the Introduction. For a definition of reformismo in Gramsci’s revolutionary perspective (and aspiration), please see note 62 in the Introduction. For a discussion of the dual usage of the term hegemony by Gramsci, please see note 19 in the Introduction. Gramsci, Prison Notebooks, pp. 58f, 97. Johannes Dragsbeek Schmidt and Jacques Hersh, Globalization and Social Change (London, Routledge: 2000), p. 241.

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39. Ibid. 40. Examples of accounts of the harmful effects of agricultural normalisation in the Egyptian press: Wafaa Mohsen, ‘Mukhattatat Suhyouniyya li-tadmir alzira‘a al-Misriyya bi-mubidat musartina. al-tatbi‘ al-zira‘i bayna Misr wa Isra’il ‘ala janah hamamat al-salam’, Akhbar al-Youm, 2 April 2009. Available at http://www.akhbaralyom.net/nprint.php?sid¼8285 (accessed 1 February 2014). Also see Shawqi ‘Al-Tatbi‘ al-Misri al-Suhyouni ba‘d thawrat Yanayer’, pp. 43 – 6. 41. Hamdy ‘Abdy, ‘Al-Mu’tamar al-awwal li-muqawamat al-tatbi‘ fi Misr yutalib biwaqf al-mufawadat wa tard al-safir al-Isra’ili’, Al-Sharq al-Awsat, 9 September 2001. Available at http://www.aawsat.com/details.asp?issueno¼8070&article ¼ 56773#.Uj3yt6a9LCQ (accessed 1 February 2014). For a more extensive list of anti-normalisation stances by political parties, organised groups, institutional insiders, intellectuals, and labour, please see Chapter 4. 42. Mohsen, ‘Mukhattatat Suhyouniyya [. . .]’. 43. Haitham Jabr, ‘Al-Tatbi‘.. li-saleh mann?’, Markaz al-Dirasat al-Ishtirakiyya, 15 February 2009. Available at http://revsoc.me/politics/lttby-lslh-mn (accessed 1 February 2014). 44. Interviews with Gamal el-Din and Ahmed al-Sayyed al-Naggar, 2001. 45. Several of the intellectual oppositional writers and labour activists and organisers whom I interviewed held these views, namely ‘Imad Gad, Ahmed al-Sayyed al-Naggar, Rif‘at Sayyed Ahmed, Kamal Khalil. Interviews, 2012. Their views were not exceptional. See, for example, Shawqi, ‘Al-Tatbi‘ al-Misri al-Suhyouni ba‘d thawrat Yanayer’, p. 25. Also see, Fahmi Huwaidi, ‘‘An Camp David wa imkanat taghyeeriha (isma‘ouna marra)’, in Ahmed, AlMuqawama 4, pp. 68– 70. Also see Ibrahim ‘Alloush, ‘Al-Tatbi‘ wa al-hirak alsha‘abi al-‘Arabi’, Ibid., pp. 62– 9. 46. Muhammed Nawwar (ed.), Amraka – la ‘Awlama: Protocolat ‘Colin Powell’ liIslah wa Tahthib al-‘Arab (Jihad li al-Nashr wa al-Tawzi‘: Lazoghli, Egypt, 2003). This is an edited collection of responses by Egyptian intellectuals to President G.W. Bush’s and Colin Powell’s Partnership for Democracy and Development in the Middle East Initiative. It also responded to what they perceived as the convenient funding and publication of the (infamous) 2002 United Nations Arab Human Development Report that coincided with the Bush and Powell initiative. Ibid., pp. 7 – 13, p. 11. 47. Ahmed al-Sayyed al-Naggar, Al-Islah Al-Iqtisadi al-Liberali: Makhraj am Ma’zaq? Dirasa Muqarana li-Tajarub.. Misr wa al-Maghreb wa Turkiyya wa al-Hind wa Tchekia (Cairo, Markaz al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2011), pp. 7, 58 – 63. 48. Nawwar, Amraka, pp. 7 – 13 and Mahmoud Al-Naqa, ‘Ma yahduth ikhtiraq thaqafi wa tafrigh al-hawiyya al-wataniyya’, ibid., pp. 130 – 41, p, 131. 49. Galal Amin, Tanmiya am Taba‘iyya, Iqtisadiyya wa Thaqafiyya: Khurafat Sha’i‘a ‘an al-Takhalluf wa al-Tanmiyya wa ‘an al-Rakha’ wa al-Rafahiyya (Cairo, AlHay’a al-Misriyya al-‘Amma li al-Kitab, 1995) and Suheir Morsy, ‘Amrika

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tatahawwal ila al-fashiyya’, in Nawwar, Amraka, pp. 143 – 53. Galal Amin noted a refrain that is frequently repeated in Egypt: that aid is spent mostly in creditor states. He argued that aid encourages dependence and integrates the state in a world system in a subordinate role. Amin, Tanmiya am Taba‘iyya, p. 74. Similarly, al-Naggar perceived globalisation as actively decreasing allegiance to a national identification and affiliation (al-intima’ al-watani). AlNaggar, Al-Islah Al-Iqtisadi al-Liberali, p. 76. 50. Galal Amin, ‘Awlamat al-Qahr: Al-Wilayat al-Muttahida wa al-‘Arab wa alMuslimeen Qabl wa Ba‘d Ahdath September 2001 (Cairo, Dar al-Shurouk, 2002), pp. 23, 31, 36, 66, 123, 139. 51. See Al-Ahali, Al-Tajammu‘ Party’s newspaper. Available at http://www.al-ahal y.com/ (accessed 1 February 2014). 52. See Jaridat al-Ishtiraki. Available at http://revsoc.me/publication-category/eleshtraky-newsapper (accessed 1 February 2014). See also the publications specifically referring to US aid and to the Egyptian economy: ‘Tahawulat aliqtisad al-Misri al-mu‘asir’, Markaz al-Dirasat al-Ishtirakyya. Available at http ://www.scribd.com/doc/96509339/%D8%AA%D8%AD%D9%88%D9% 84%D8%A7%D8%AA-%D8%A7%D9%84%D8%A7%D9%82%D8%AA %D8%B5%D8%A7%D8%AF-%D8%A7%D9%84%D9%85%D8%B5% D8%B1%D9%8A-%D8%A7%D9%84%D9%85%D8%B9%D8%A7% D8%B5%D8%B1; ‘Al-Naqabat al-‘ummaliyya al-Misriyya: Ru’ya thawriyya’, Mahmoud ‘Abbass, Markaz al-Dirasat al-Ishtirakiyya. Available at http://revs oc.me/content/lnqbt-lmly-lmsry-rwy-thwry. Available at http://www.scribd. com/doc/96506997/%D8%A7%D9%84%D9%86%D9%82%D8%A7% D8%A8%D8%A7%D8%AA-%D8%A7%D9%84%D8%B9%D9%85% D8%A7%D9%84%D9%8A%D8%A9-%D8%A7%D9%84%D9%85% D8%B5%D8%B1%D9%8A%D8%A9-%D8%B1%D8%A4%D9%8A% D8%A9-%D8%AB%D9%88%D8%B1%D9%8A%D8%A9; Maha Yousef, ‘Al-Ma‘ouna al-Amrikiyya: Limaza? Wa liman?’, Majallat al-Sharara – Jama‘at Tahrir al-‘Amal, 19 February 2010. Available at http://revsoc.me/ economy/lmwn-lmryky-lmdh-wlmn (accessed 1 February 2014); Sara Naguib, ‘Al-Ma‘ouna wa al-diktator’, Markaz al-Dirasat al-Ishtirakyya, 16 June 2006. Available at http://revsoc.me/economy/lmwn-wldykttwr; Isma‘il Zahir, ‘AlMa‘ouna al-Amrikiyya wa al-tahaluf al-tabaqi bayna nizam Mubarak wa alWilayat al-Muttahida’, Munazzamat al-Ishtirakyyeen al-Thawriyyeen, 15 April 2004. Available at http://revsoc.me/economy/lmwn-lmryky-wlthlf-ltbqybyn-nzm-mbrk-wlwlyt-lmthd; ‘Al-Istihwaz ‘ala al-zira‘a al-Misriyya: Misr wifqan li-Monsanto’, Al-Ishtirakiyyoun al-Thawriyyoun, 8 May 2012. Available at http://revsoc.me/economy/lsthwdh-l-lzr-lmsry; Hussam al-Hamalawy, ‘Ziyarat Mubarak li-Amrika: Mazid min al-taba‘iyya wa la hadith ‘an aldimukratiyya’, Markaz al-Dirasat al-Ishtirakiyya, 8 June 2012. Available at http://revsoc.me/politics/zyr-mbrk-lmryk-mzyd-mn-ltby-wl-hdyth-n-l dymqrty (all accessed 1 February 2014). See also the following article for a class critique of the US – Egyptian – Israeli – Gulf Arab alliance and for the

NOTES

53.

54.

55.

56. 57. 58.

59.

60.

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Revolutionary Socialist platform, which is opposed to US policies and interests in the Middle East, Palestine and Egypt: Al-Ishtirakiyyoun al-Thawriyyoun, ‘Hurriyya – ‘Adala ijtima‘iyya – Karama insaniyya’, Al-Ishtirakiyyoun alThawriyyoun, 7 April 2012. Available at http://e-socialists.net/node/8597 (accessed 1 February 2014). See Al-‘Arabi, the newspaper of the Nasserite party. Available at http://www. al-3araby.com/ (accessed 1 February 2014). The Nasserites are the oppositional political party that is among the most interested in foreign issues. Party leaders are active in solidarity work with the Palestinians and Lebanese, oppose normalisation with Israel, oppose Western sanctions against Arab states and are strongly critical of US policies in the Middle East. Ahmed al-Sayyed al-Naggar, Al-Inhiyar al-Iqtisadi fi ‘Asr Mubarak: Haqa’iq al-Fasad wa al-Batala wa al-Ghala’ wa al-Rukoud wa al-Duyoun (Cairo, AlMajlis al-A‘la li al-Thaqafa, 2012), p. 406. Interview with Hussam Gamaleddin, Director of Research at Al-Ahram Center for Political and Strategic Studies, 2012. For more on Haroun’s antiZionist stances, see Ahmad Bilal, ‘Shehata Haroun, Yahudi did al-suhyouniyya qaddama ibnatahu hadiyya li-Misr’, Al-Masry al-Yowm, 16 January 2013. Available at http://www.almasryalyoum.com/node/1386056 (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 499. Ibid. John Williamson and Mohsin Khan, ‘Debt relief for Egypt?’, Peterson Institute for International Economics, 17 November 2011. Available at http:// www.iie.com/publications/pb/pb11-17.pdf (accessed 1 February 2014). Hazem el-Beblawi, Arba‘at Shuhour fi Qafas al-Hukumah (Cairo, Dar alShurouq, 2012), pp. 63, 72). El-Beblawi’s description of the quality of the debt is important because it comes from someone who is a supporter of free market economics, worked for many years at the Arab Monetary Fund and was Finance Minister and Deputy Prime Minister in Egypt. Others have expressed positive views of Soviet aid in comparison with American aid. The Soviet loan for the construction of the Aswan Dam (the funding of which the World Bank had rejected under American pressure), was given at a 2.5 per cent interest rate, not to be repaid until its completion. It had the option of repayment with Egyptian exports so as to boost Egyptian production. It changed the fate of the nation and is considered one of the greatest infrastructural achievements of the twentieth century. See Ahmed al-Sayyed al-Naggar, ‘Al-Ma‘ounat alAmrikiyya li al-duwal al-‘Arabiyya: Al-Waqi‘ wa al-shurout wa ihtimalat al-mustaqbal, in ‘Taqrir Al-Ittijahat al-Iqtisadiyya al-Istratijiyya, 2009 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2009), pp. 171 – 7, p. 174. Also see al-Naggar, ‘‘‘Ala hamish intikhabat al-ri’asa.. Nazra tahliliyya wa naqdiyya li al-barnamij al-iqtisadi li-Mubarak’, in alNaggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 205– 35. Ibid., pp. 12 – 6.

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61. Ibid. 62. Al-Naggar, ‘Iqtisadat al-qita‘ al-‘am wa mu‘dilat tahqiq al-kafa’a aw altahawwul li-iqtisad al-suq’, Taqrir al-Ittijahat al-Iqtisadiyya al-Istratijiyya 2006 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2006), pp. 219– 48, p. 225. 63. Al-Gebali, interview, 2012. 64. Al-Naggar, ‘Al-Khaskhasa. Qira’a naqdiyya li al-siyasa wa li safaqat atharat aljadal’, Taqrir Al-Ittijahat al-Iqtisadiyya al-Istratijiyya, 2006, pp. 301 – 15, pp. 305 –8. 65. Stephen Yeaple and Warren Moskowitz, The Literature on Privatization (New York, Federal Reserve Bank of New York, 1995). 66. Interview with Ahmed Abu Zeid, Assistant Minister of Investment, 2012. 67. For an in-depth discussion of the effects of competition on privatisation, see Paul Cook and Colin Kirkpatrick, ‘Privatization in developing countries: an overview’, in Peter Cook and Colin Kirkpatrick (eds), Privatization in Less Developed Countries, (New York, St Martin’s Press, 1988), pp. 3 – 46. See also Yeaple and Warren, The Literature on Privatization, p. 15. 68. Al-Naggar, interview 2012. 69. For prominent examples, see ‘Alaa el-Sayyed, ‘Fadha’ih al-kibar fi Misr’, Aljazeera, 19 February 2011. Available at http://www.aljazeera.net/NR/exeres/ 7B1B50E9-BB0E-4B71-877D-4AAC1384E3AE.htm?GoogleStatID¼ 9 (accessed 1 February 2014). 70. Many of these conclusions about the effects of privatisation were drawn two years after the Ahmed Nazif government. Al-Naggar, ‘Al-Khaskhasa.’, pp. 304 –8. 71. Neoclassical economics is an approach that relies on rational choice theory. It focuses on the determination of supply and demand levels and their equilibria – which determine prices, output and income distributions in markets – as mediated by utility maximisation on the part of consumers and profit maximisation on the part of producers/firms. Famous neoclassicist economists include Adam Smith, David Ricardo and John Stuart Mill. This approach is criticised for having a normative bias, so that it does not describe the operation of real economies but of optimal conditions, where the rationality assumption, the full knowledge assumption, the assumption of a competitive environment that allows the free operation of market forces to determine equilibria, the profit-motivated economic man assumption and so forth are utopian assumptions. 72. The neoclassical Chicago School economic theory rejected Keynesianism in favour of monetarism. The school generally holds a normative position favouring economic liberalism and free markets. Among the most famous economists in that school are Ronald Coase, Milton Friedman (the more libertarian) Frederich Hayek and Eugene Fama. Keynesian economists build on the legacy of John Maynard Keynes. Among the most famous Keynesians are Alan S. Blinder, Arthur Sullivan, Steven M. Sheffrin and Gordon Fletcher.

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303

73. The crucial factor in the Ricardian view is how people perceive the financing of debt: namely, if people expect that future taxes will nullify future payments of principal and interest, then bond finance is equivalent to tax finance, and government debt has no effect on anything important. This effect is named ‘Ricardian equivalence’. John J. Seater, ‘Government debt and deficits’, The Concise Encyclopedia of Economics, 2nd edn. Available at http://www.econlib. org/library/Enc/GovernmentDebtandDeficits.html (accessed 1 February 2014). See also Alan Blinder, ‘Keynesian economics’, The Concise Encyclopedia of Economics, 2nd edn. Available at http://www.econlib.org/library/Enc/Keynes ianEconomics.html (accessed 1 February 2014). 74. Al-Naggar, ‘Al-Khaskhasa.’, pp. 303– 15. 75. The category of Direct Investments began including investments in the Petroleum sector in 2004. Direct investments in Egypt increased markedly under the ‘Ebeid government in 1998 and rose again in 2000. They fell to a third of their 2000 amount thereafter, until the Nazif government in 2004/5, peaking in 2007/8. Central Bank of Egypt, ‘Balance of Payments’. Available at http://www.cbe.org.eg/English/EconomicþResearch/Time þ Series/ (accessed 1 February 2014). 76. US Embassy in Cairo, WikiLeaks Cable, Cairo 5350, 5 July 2005. Available at http://wikileaks.ch/cable/2005/07/05CAIRO5350.html (accessed 1 February 2014). 77. Also see Leroy Jones, Rankaj Tandon and Ingo Vogelsang, ‘Selling state-owned enterprises: a cost-benefit approach’, in Ravi Ramamurti and Raymond Vernon (ed)s, Privatization and Control of State-Owned Enterprises, EDI Development Studies (Washington, DC, World Bank, 1991), pp. 29–53; quoted in Yeaple and Warren, The Literature on Privatization. 78. Interview with el-Beblawi, 2012. 79. Alexandria Bank, ‘Working papers: risks of the Egyptian public debt’, July 2011, p. 3. According to the report, ‘the gross domestic debt dramatically increased through the past few years reaching LE 1001.93 bn. in Q3 2010/11 after recording LE 425.6 bn. at the end of June 2004’, Source: Central Bank of Egypt. Available at http://www.alexbank.com/uploads/documents/research/ Risks%20of%20the%20Egyptian%20public%20debt.pdf (accessed 1 February 2014). 80. See for instance the increase in most of the categories composing gross domestic debt structure: Ibid., p. 4. 81. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 485, 489. 82. Abd el-Khalek Farouk and Reda Sa‘id, ‘Ma’zaq al-iqtisad al-Misri ‘ashiyyat thawrat 25 Yanayer wa kayfiyyat al-khurouj minhu’, El-Majlis el-Watani. Available at http://www.almaglesalwatany.org/economics.aspx (accessed 1 February 2014). 83. Ibid. 84. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 187.

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85. Hisham Hamadah, ‘Al-Fasad fi Misr... mumanhaj... hukumi... mutawahhish’, Nafizat Dumyatt, 2 February 2014. Available at http://domiatwindow.net/ article.php?id¼4699. Accessed 10 February 2014. 86. The Nazif government implemented build-operate-transfer (BOT) agreements. BOTs agreements are a form of project financing whereby a private entity receives a concession from the public sector/government to finance, design, construct and operate an enterprise or resource according to the concession contract. The project investor recovers their investment by operating and maintenance expenses in the completed project. Fees are often raised to speed up the recovery of investment. 87. Central Bank of Egypt, Monthly Statistical Bulletin, February 2005, pp. 21 – 31. Quoted in al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 159 – 64. 88. Al-Naggar, ‘Iqtisadat al-qita‘’, p. 231. 89. World Bank, “External debt stocks, total (DOD, current, US$),” International Debt Statistics. Available at http://data.worldbank.org/indicator/DT.DOD. DECT.CD?page¼6 (Accessed 6 June 2015). 90. Central Bank of Egypt, ‘External debt’. Available at http://www.cbe.org.eg/ English/Economic þ Research/Time þ Series/ (accessed 1 February 2014). 91. Central Bank of Egypt, ‘Balance of Payments’. Available at http://www.cbe.org. eg/English/Economic þ Research/Time þ Series/ (accessed 1 February 2014). 92. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 485, 489. 93. Central Bank of Egypt, ‘Exports and imports (including the Free Zones), by Geographical Location’. Available at http://www.cbe.org.eg/English/ Economic þ Research/Time þ Series/ (accessed 1 February 2014). 94. For the data, also see CAPMAS, ‘Exports by sector, 2006’. Available at http://ms rintranet.capmas.gov.eg/pls/busns/secta; and Index Mundi, ‘Value of oil exports, Egypt’, citing IMF World Economic Outlook 2011 for Egypt. Available at http ://www.indexmundi.com/egypt/oil_exports.html (accessed 1 February 2014). Also see al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 249. 95. Hazem el-Beblawi, interview, 2012. 96. A footnote at the Central Bank of Egypt’s Time Series webpage about the Balance of Payments confirms the accounting improvisation. Available at http://www.cbe.org.eg/English/EconomicþResearch/Time þ Series/ (accessed 1 February 2014). 97. Armen A. Alchian and Harold Demsetz, ‘Production, information costs, and economic organization’, American Economic Review 62/5 (December 1972), pp. 777 – 95, cited in Yeaple and Moskowitz, The Literature on Privatization, p. 6. Note that the motivation for corruption is assumed to lie entirely in the realm of politics. 98. Underlying these claims is the assumption that private ownership removes the principal-agent moral hazard problem – when the decision maker is not the owner – that may cause a mismatch between objectives and reduce profit-maximisation. Eugene F. Fama, ‘Agency problems and the theory of the firm’, Journal of Political Economy 88/2 (April 1980), pp. 288–307 and Oleh Havrylyshyn and Donal

NOTES

99.

100. 101.

102. 103.

104.

105. 106. 107.

108. 109.

110. 111.

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McGettigan, ‘Privatization in transition countries – lessons of the first decade’, International Monetary Fund, August 1999. Available at http://www.imf.org/ external/pubs/ft/issues/issues18/index.htm (accessed 1 February 2014). Al-Naggar, ‘Iqtisadat al-qita‘ [. . .]’, pp. 225– 6. In 2004 al-Naggar published two articles in Al-Ahram in which he criticised the economic performance under the government of Kamal Ganzouri and later of ‘Atef ‘Ebeid. He argued that the ‘Ebeid government should be removed. Two weeks later it was. AlNaggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 475. Ahmed Abu Zeid, interview, 2012. R.S. Ahmed, interview, 2012. Ahmed’s comments are confirmed by a Washington Post article: James V. Grimaldi and Robert O’Harrow Jr, ‘In Egypt, corruption cases had an American Root’, The Washington Post, 20 October 2011. Available at http://www.washingtonpost.com/investigations/in-egyptcorruption-had-an-american-root/2011/10/07/gIQAApWoyL_story.html (accessed 1 February 2014). Interview, 2012. Hazem el-Beblawi, interview, 2012; Abu Zeid, interview, 2012; ‘Abd elKhalek Farouk, Juzour al-Fasad al-Iqtisadi fi Misr: Bi’at al-‘Amal wa Siyasat alUjour wa al-Murattabat fi Misr, 1963– 2006 (Cairo, Dar al-Shorouk, 2008); and al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012). Ibid., p. 494. See also, Nabil Sharaf el-Din, ‘Mubarak yastaqbil al-hukuma aljadida’, Elaph, 24 July 2004. Available at http://www.elaph.com/Web/Pol itics/2004/7/240.htm?sectionarchive¼Politics (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2005, 2012), Al-Islah Al-Iqtisadi alLiberali, interview, 2012. Interview, 2012. Minister of Transportation Muhammad Mansour and Minister of Housing Ahmed Mughrabi formed a partnership and together bought the Egyptian – American Bank at base prices. Similarly, Mughrabi also expropriated land and properties at less than a fifth of their worth. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 497. Interviews, 2012. See, for example, a symposium of leading Egyptian intellectuals on the subject of globalisation and the mainly (economic) conflict facing non-imperialist states: Khalid al-Sirgani, Salah Salim, Muhammad Harbi, Nabil ‘Abd el-Fattah, ‘Ali Mabrouk, Ahmed al-Sayyed al-Naggar, Magdi Subhi, Anwar ‘Abd el-Latif, Muhammad ‘Eid Ibrahim, and Shafi‘ Shalabi, ‘Salon Al-Ahram al-thaqafi (2), Samir Amin: al-Nizam al-ra’smali dakhala marhalat al-kharif’, Al-Ahram, 18 November 2012. Available at http://digital.ahram.org.eg/articles.aspx?Serial ¼1099180&eid ¼ 13741 (accessed 1 February 2014). Rif‘at Sayyed Ahmed, 2002 and interview 2012; Amin, ‘Awlamat al-Qahr. See discussion in the introduction of President Bill Clinton’s ‘National Security Strategy of Engagement and Enlargement’ (February 1994). The White House, ‘A national security strategy of engagement and enlargement’,

306

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113.

114.

115.

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(February 1994). Available at http://www.dod.mil/pubs/foi/International_ security_affairs/other/641.pdf (accessed 1 February 2014). See also George W. Bush in the National Security Strategy of 2002, which featured Colin Powell’s USAID-led Middle East Partnership Initiative. Colin Powell, ‘Sec. of State Colin Powell – the US Middle East Partnership Initiative’, 12 December 2002. Available at http://www.heritage.org/research/reports/2002/ 12/sec-of-state-colin-powell-the-us-middle-east-partnership-initiative (accessed 1 February 2014). See also Jeremy M. Sharp, ‘The Middle East Partnership Initiative: an overview’, Congressional Research Service, 23 July 2003. Available at http://www.iwar.org.uk/news-archive/crs/23003.pdf (accessed 1 February 2014). It was to further normalisation (of commercial ties) through the business elite/‘natural partners’ avenue that the QIZ agreements were formulated: WikiLeaks Document Release, 2 February 2009. Available at http://wikileaks. org/wiki/CRS-RS22002 (accessed 1 February 2014). Mary Jane Bolle, Alfred Prados and Jeremy Sharp, Foreign Affairs, Defense, and Trade Division, ‘Qualifying Industrial Zones in Jordan and Egypt’, Report RS22002, Congressional Research Service, 7 July 2006. A policy brief to Congress by the Congressional Research Service enumerates the following US interests in Egypt: ‘[. . .] A third US interest is to maintain the Egyptian – Israeli peace treaty. A fourth reason for maintaining good USEgyptian relations is defense cooperation in opposing threats or aggression against regional friends, as was demonstrated in Egypt’s active participation in the 1991 liberation of Kuwait and in Egypt’s military cooperation with US forces in the 2003 invasion of Iraq. Cooperation between US and Egyptian armed forces in joint military exercises over the previous decade (the “Bright Star” exercises) prepared the way for the 1990-1991 defense of the Arabian Peninsula (“Operation Desert Storm”).’ Jeremy M. Sharp, ‘CRS Issue Brief for Congress: Egypt – United States relations’, Congressional Research Service, Library of Congress: 15 February 2005. Available at http://www.au.af.mil/au/ awc/awcgate/crs/ib93087.pdf (accessed 1 February 2014). See WikiLeaks Cable labelled ‘Secret’ by Ambassador Margaret Scobey, CAIRO0549, 31 March 2009. Available at http://wikileaks.org/cable/2009/ 03/09CAIRO549.html (accessed 1 February 2014). Jeremy M. Sharp, ‘Egypt: background and US relations’, Congressional Research Service (2 September 2009). Available at research.policyarchive.org/2506.pdf (accessed 12 May 2014). Jeremy M. Sharp, ‘The Egypt-Gaza border and its effect on Israeli-Egyptian relations’, CRS Report RL34346 (1 February 2008), Congressional Research Service, WikiLeaks Release, 2 February 2009. Available at http://wikileaks. org/wiki/CRS-RL34346. See also: http://www.foreignpolicy.com/articles/2012/ 02/03/cairos_undercover_strongman?page¼full and http://www.telegraph. co.uk/news/worldnews/wikileaks/8314459/WikiLeaks-Suleiman-toldIsrael-he-would-cleanse-Sinai-of-arms-runners-to-Gaza.html. All accessed 1 February 2014.

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124 –126

307

116. Government Accountability Office, ‘State and DOD need to assess how the Foreign Military Financing Program for Egypt achieves US foreign policy and security goals’, GAO-06-437, 11 April 2006. Available at http://www.gao. gov/products/GAO-06-437 (accessed 1 February 2014). 117. Shana Marshall and Joshua Stacher, ‘Egypt’s generals and transnational capital’, Middle East Report 262 – Pull of the Possible 42 (Spring 2012), pp. 12–18. 118. Stephen Gotowicki, ‘The role of the Egyptian military in domestic society’, Operational Environment Watch, Foreign Military Studies Office. Available at http://fmso.leavenworth.army.mil/documents/egypt/egypt.htm (accessed 12 March 2015). 119. For example, Mamdouh al-Zuhayri and Mustafa ‘Afifi were both appointed governors of Southern Sinai after the expiration of their service in the Republican Guard. ‘Abir Ayman, ‘Balagh li al-na’ib al-‘am yattahem muhafizin sabiqin bi al-tarabbuh wa ihdar akthar min miliar junayh min al-mal al-‘am’, Al-Mashhad, 30 January 2012. Available at http://almashhad.net/News/53033. aspx (accessed 13 August 2014). 120. Ibid. 121. Interview with Abu Zeid, 2012. 122. Interview, 2012. 123. Egypt’s lobbyists must register as foreign agents, which requires them to file all contacts with government and NGO officials, and therefore, enables whistleblower organisations and the public to access these records. For more, see Chris Good, ‘42 Members of Congress met with the Egyptian military last year’, The Atlantic, 1 February 2011. Available at http://www.theatlantic.com/politics/ archive/2011/02/42-members-of-congress-met-with-the-egyptian-militarylast-year/70606/ (accessed 1 February 2014). For ties that bind the Egyptian military with the US military-industrial complex, see Pratap Chatterjee, ‘Egypt’s military-industrial complex’, The Guardian, 4 February 2011. Available at http://www.guardian.co.uk/commentisfree/cifamerica/2011/feb/04/egyptarms-trade (accessed 1 February 2014). To view the database of lobbying contacts as well as the original expose of the story, see Paul Blumenthal, ‘Lobbying contacts by Egypt’s Washington lobbyists’, The Sunlight Foundation, 31 January 2011. Available at http://sunlightfoundation.com/blog/2011/01/31/l obbying-contacts-by-egypts-washington-lobbyists/ (accessed 1 February 2014). 124. For a historical list of the largest contracts for the co-production of military hardware, see ‘US sales of military hardware to Egypt’, The Washington Post, 25 July 2013. Available at http://www.washingtonpost.com/wp-srv/special/ world/egypt-military-aid/ (accessed 1 February 2014). 125. US Embassy in Cairo, ‘Security assistance and cooperation for a new Egypt’. Available at http://egypt.usembassy.gov/security.html (accessed 1 February 2014). 126. For an overview of the intertwined interests between the US military, its contractors, and the various sectors targeted by even economic aid to Egypt, see the report by CENTCOM at the Army Logistics University website,

308

127. 128.

129.

130. 131.

132. 133. 134. 135. 136. 137.

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CENTCOM. Available at http://www.almc.army.mil/ALU_INTERNAT/Cou ntryNotes/CENTCOM/EGYPT.pdf (accessed 1 February 2014). For more on the role of the Egyptian military see, Ahmed Hashim, ‘The Egyptian military, part two: from Mubarak onward’, Middle East Policy 1/4 (2011), pp. 106 – 28. See also Walter Armbrust, ‘The revolution against neoliberalism’, Jadaliyya, 23 February 2011. Available at http://www.jadaliyya.com/pages/index/717/ the-revolution-against-neoliberalism (accessed 1 February 2014). Farouk, Juzour al-Fasad al-Iqtisadi fi Misr, pp. 174 – 8. El-Beblawi, Arba‘at Shuhour, pp. 129– 33. Among the direct beneficiaries of these subsidies were oil producers. In the fiscal year following the appointment of the Nazif government, the overall category of subsidies jumped by 381 per cent, mainly due to the expanding subsidy for the Egyptian General Petroleum Corporation (al-Hay’a al-‘Amma li al-Petrol). Ibid., p. 129. Andy McDonough, ‘Egypt: government initiatives for subsidy reform’, Arab Global Network – The Egyptian – British Chamber of Commerce, 21 March 2010. Available at http://www.english.globalarabnetwork.com/201003215236/ Economics/egypt-government-initiatives-for-subsidy-reform.html (accessed 1 February 2014). El-Beblawi, Arba‘at Shuhour, p. 105. ‘Abd el-Khalek Farouk, ‘Fi nadwatihi al-usbou‘iyya ‘an al-da‘m wa al-‘adala alijtima‘iyya fi Misr’, Al-Sha‘b, Labor Party symposium, 18 December 2007. Available at http://www.masress.com/alshaab/9516 (accessed 1 February 2014). Ibid. Ibid. Ibid. Ibid. El-Beblawi, Arba‘at Shuhour, p. 96. ‘Abd el-Khalek Farouk, Al-Qawanin al-Iqtisadiyya al-Mufsida, Waraqat Siyasat ‘Amma, No. 2 (Cairo, The Nile Center for Economic and Strategic Studies. 2011). Available at http://nilecss.com/index.php/2013-02-18-07-32-04/ 2013-02-18-08-30-10/item/62-2.html (accessed 15 March 2013). In fact, Farouk and others filed a lawsuit against President Hosni Mubarak claiming to have documents proving that he profited (illegally) from arms deals dating back to his days as a general in the air force before he became president. The lawsuit claimed that Mubarak, along with Saudi arms dealer, ‘Adnan Khashoshgi and Saudi Minister Former Chief of National Security, Kamal Adham, were involved in delivering arms to the Contras in Nicaragua in coordination with the CIA. Shaima’ ‘Issa, ‘Dr ‘Abd el-Khalek Farouk li al‘Muheet’: Mukhattat li-tafkik Misr.. LE 100 milion manhouba bi ‘al-qanun’, Moheet, 22 September 2012. Available at http://moheet.com/news/newdetails/ 451207/1/%D8%AF.%D8%B9%D8%A8%D8%AF-%D8%A7%D9%84% D8%AE%D8%A7%D9%84%D9%82-%D9%81%D8%A7%D8%B1% D9%88%D9%82-%D9%84%D9%80%D9%85%D8%AD%D9%8A%D8%

NOTES

138.

139. 140.

141.

142.

143.

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309

B7-%D9%85%D8%AE%D8%B7%D8%B7-%D9%84%D8%AA%D9% 81%D9%83%D9%8A%D9%83-%D9%85%D8%B5.html#.Uu2lnT1dWSo (accessed 1 February 2014). This argument is made by prominent economists Salah Gouda, al-Naggar and ‘Abd el-Khalek Farouk. See, for example, Farouk, Al-Qawanin al-Iqtisadiyya al-Mufsida. Interviews, 2012. World Bank citing source data from Stockholm International Peace Research Institute (SIPRI), Yearbook: Armaments, Disarmament and International Security, ‘Military Expenditures (per cent of GDP). Available at http://data. worldbank.org/indicator/MS.MIL.XPND.GD.ZS (accessed 1 February 2014). David H.Bearce, ‘Why foreign aid may be less effective at promoting economic growth in more democratic countries’, paper presented at the annual meeting of the ISA’s 50th Annual Convention Exploring the Past, Anticipating the Future, New York Marriott Marquis, New York, 15 February 2009. Available at http:// citation.allacademic.com/meta/p311285_index.html (accessed 1 February 2014). US Embassy in Cairo, WikiLeaks Cable, ‘07Cairo539, ‘Egypt rail: US companies sweep locomotive tender’, 7 February 2007. Available at http://wikileaks.ch/ cable/2007/02/07CAIRO539.html; US Embassy in Cairo, WikiLeaks Cable, Cairo 2515, ‘Magen David Adom issue: foreign minister commits to “study, research, and try to help”’, 5 March 2005. Available at http://wikileaks.ch/cable/ 2005/03/05CAIRO2515.html; US Embassy in Cairo, WikiLeaks Cable, Cairo 5350, ‘Update on Egypt’s privatization program’, 5 July 2005. Available at http://wikileaks.ch/cable/2005/07/05CAIRO5350.html. US Embassy in Cairo, WikiLeaks Cable, Cairo 2967, April 5, 2005. Available at http://wikileaks. ch/cable/2005/04/05CAIRO2967.html; and US Embassy in Cairo, WikiLeaks Cable Cairo 3147, ‘Egyptian American Bank to be sold’, 5 April 2005. Available at http://wikileaks.ch/cable/2005/04/05CAIRO3147.html. All accessed 1 February 2014. The following US Embassy cable categorises as ‘nationalist’ opposition the individuals and groups who oppose normalisation and who ask the hard questions: ‘Kifaya is instead an umbrella movement encompassing elements of widely differing ideologies and affiliations. Communists, “revolutionary socialists”, Nasserists, liberals, and Islamists have all identified themselves as Kifaya members, united in agreement that ‘Egypt has had enough’ of the Mubarak regime and its vices [. . .] prominent personalities play key leadership/ organisational roles. George Ishaq, a retired Catholic teacher, is probably the most-quoted Kifaya member, and his downtown Cairo apartment is often the venue for the group’s organisational meetings and media appearances. Abdel Halim Qandil, editor of the Nasserist weekly Al-Araby (who was abducted, beaten, and left naked on a desert highway in an obviously political incident in November 2004) is often described in media reports as a spokesman for the group. Kamal Khalil, a former student activist and director of Egypt’s Center for

310

144.

145.

146.

147. 148. 149. 150. 151. 152. 153. 154. 155. 156.

157. 158.

NOTES

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Socialist Studies, is also a conspicuous Kifaya member, often seen leading chants at demonstrations. Other important players often mentioned in discussions of Kifaya are Mohammed Sayyed Said, the Deputy Director of the semi-official Ahram Center for Strategic Studies, who brings to the table a more pragmatic but still intellectual perspective and Hany Anany, a wealthy businessman thought to underwrite many of the group’s expenses. (C) Most trace Kifaya’s roots back to the summer of 2004, when 300 intellectuals and other public figures issued a founding statement outlining the group’s opposition to what they described as the GOE’s corruption, hypocrisy, exploitation, and autocracy. The founding statement also singles out the GOE’s failure to confront threats to national security, including “Zionist aggression” against the Palestinians, the US occupation of Iraq, and “plans to redraw the map of the region”, such as the Broader Middle East and North Africa Initiative’. US Embassy in Cairo, WikiLeaks Cable, ‘Update on Egypt’s privatization program’, Cairo 5272, 5 July 2005. Available at http://wikileaks.ch/cable/2005/07/05CAIRO5272.html. US Embassy in Cairo, ‘Future of gas in Egypt: analysis and conclusion’, Cairo 4972, 5 June 2005. Available at http://wikileaks.ch/cable/2005/06/ 05CAIRO4972.html (accessed 1 February 2014). US Embassy in Cairo, WikiLeaks Cable, Cairo 5350, ‘Update on Egypt’s privatization program’, 5 July 2005. Available at http://wikileaks.ch/cable/ 2005/07/05CAIRO5350.html (accessed 1 February 2014). US Embassy in Cairo, WikiLeaks Cable 3746, ‘Nazif slows down Egypt’s privatization program’, 15 June 2006. Available at http://wikileaks.org/cable/ 2006/06/06CAIRO3746.html (accessed 1 February 2014). Ibid. Ibid. Farouk, Juzour al-Fasad al-Iqtisadi fi Misr, pp. 174– 8. 276 – 7. Al-Naggar, ‘Al-Ma‘ounat al-Amrikiyya li al-duwal al-‘Arabiyya’, p. 175. Amin, ‘Awlamat al-Qahr, pp. 100, 139. Sharp, ‘Egypt’. Ibid. p. 3. Ibid. p. 4. Ibid. See the following WikiLeaks cables for perceptions among critics and political opponents of the regime, as noted by the US embassy staff: US Embassy in Cairo, WikiLeaks Cable, Cairo 5272, 5 July 2005. Available at http://wikileaks. ch/cable/2005/07/05CAIRO5272.html; US Embassy in Cairo, WikiLeaks Cable, Cairo 8161, ‘GoE privatizes “strategic” firms, within limits’, 5 October 2005. Available at http://wikileaks.org/cable/2005/10/05CAIRO8161.html (accessed 1 February 2014). Rif‘at Sayyed Ahmed, interview, 2012. Also see Ahmed, Al-Muqawama, 4 April 2012. Zeinab Fathi Abu al-‘Ela, ‘Malaf al-Marajil al-Bukhariyya amam al-na’eb al‘am ba‘d al-khaskhasa wa al-tasfiya’, Al-Ahram Al-Iqtisadi, 11 April 2011.

NOTES

159. 160. 161. 162. 163.

164. 165. 166.

167.

168. 169.

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311

Available at http://digital.ahram.org.eg/articles.aspx?Serial¼469845&eid ¼ 385 (accessed 1 February 2014). Interviews, el-Beblawi and al-Naggar, 2012. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012) pp. 155– 235. Ibid. Abu al-‘Ela, ‘Malaf al-Marajil al-Bukhariyya [. . .]’; al-Naggar, Al-Inhiyar alIqtisadi [. . .] (2012), pp. 155– 235. For more on Orascom Construction Industries and specifically its military construction, see Bloomberg, ‘Orascom Cons. Inds. ORSD OCI awarded US$87 M airfield contract in Egypt’, 10 October 2012. Available at http:// www.bloomberg.com/article/2012-10-10/aiUA_UxEGQqM.html (accessed 1 February 2014). Al-Naggar, interview, 2012. Al-’Ela, ‘Malaf al-Marajil al-Bukhariyya [. . .]’. In a similar vein, the US was fully aware the opposition to subordination to the US among the public, labour, opposition parties, key intellectuals and so forth, would prevail if the democratic means were available to defeat the autocratic execution of the agenda (of privatisation) by key members in the regime. An US Embassy in Cairo cable states: ‘Nevertheless, even as he touches previously untouchable industries, Mohieldin claims he will moderate the pace of privatization and work hard to manage expectations. We would be surprised if the MOI were to pull off any more controversial privatization deals prior to next month’s parliamentary elections.’ US Embassy in Cairo, WikiLeaks Cable, Cairo 8161, ‘GoE privatizes “strategic” firms, within limits’, 5 October 2005. Available at http://wikileaks.org/cable/2005/10/ 05CAIRO8161.html (accessed 1 February 2014). There were allegations that Israel had the only other competing firm in the region that would benefit from the dissolution of al-Marajil. Mustafa al-Naggar, ‘Mudir al-Marajil al-Bukhariyya yutalib bi-sur‘at tasallum al-dawla li alsharika’, Al-Youm al-Sabi‘, 6 October 2011. Available at http://m.youm7.com/ News.asp?NewsID¼507037 (accessed 1 February 2014); Mahmoud al-Shazli, ‘Karithat tafkik al-Marajil al-Bukhariyya tamma li-salih Isra’il’, Al-Bawaba, 22 March 2012. Available at http://www.albawaba.com/ar/%D9%83%D8%A7% D8%B1%D8%AB%D8%A9-%D8%AA%D9%81%D9%83%D9%8A% D9%83-%D8%B4%D8%B1%D9%83%D8%A9-%D8%A7%D9%84% D9%85%D8%B1%D8%A7%D8%AC%D9%84-%D8%A7%D9%84% D8%A8%D8%AE%D8%A7%D8%B1%D9%8A%D8%A9-%D8%AA% D9%85-%D9%84%D8%B5%D8%A7%D9%84%D8%AD-%D8%A5% D8%B3%D8%B1%D8%A7%D8%A6%D9%8A%D9%84-418134 (accessed 1 February 2014). Kamil Khalil, interview, 2012. Labour protested visits by Israeli officials, Israeli participation in events such as the Book Fair. They also issued countless communique´s against QIZ. Kamal Khalil, interview, 2012.

312

NOTES TO PAGES 136 –142

170. Al-Naggar, interview, 2012. 171. El-Beblawi interviews, 2012. El-Beblawi, in contrast to the others whom I interviewed, felt that free market policies were the solution to Egypt’s problems and that they would have the best chances of meeting the economic challenges, which are enhanced by ‘peace’. ‘Peace’ must be ‘seized’ as the ‘only choice’ and was the ‘biggest challenge’ facing Arabs today. El-Beblawi repeated the (Kantian) myth that liberal democracies are more peaceful. The resources that were lost to war must be redirected to peace, he argued, as the conditions of liberal democracy structure those democracies so as not to fight each other. For him, Egypt ought to emulate Israel, which is geographically in the Middle East but is part of the Western world in its civilisational outlook. Thus, economics were more important than geography. Hazem elBeblawi, Nahnu wa al-Gharb, ‘Asr al-Muwajaha am al-Talaqi? (Cairo, Dar al-Shurouq, 1999), pp. 57 – 61. 172. ‘Imad Gad, Mustafa al-Fiqi, ‘al-Naggar, R.S. Ahmed and Dina Shehata, interviews, 2012. 173. Al-Fiqi, interview, 2012. 174. Gad, interview, 2012. 175. Ibid. 176. ‘Issa, ‘Dr ‘Abd el-Khalek Farouk li al-‘Muheet’. 177. Interviews with Gad and al-Naggar, 2012. 178. R.S. Ahmed, interview, 2012. 179. Farouk, Al-Qawanin al-Iqtisadiyya al-Mufsida. See also al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 498. 180. Farouk and Sa‘id, ‘Ma’zaq al-iqtisad al-Misri [. . .]’, p. 498. 181. R.S. Ahmed, interview, 2012. 182. IMF, ‘General government total expenditure (percent of GDP)’, Egypt and Israel. Available at http://datamarket.com/data/set/1h79/general-governmenttotal-expenditure-percent-of-gdp#!display¼ line&ds ¼ 1h79!1ewr ¼ 4t.4c (accessed 1 February 2014). See also OECD, ‘Government at a glance 2011 country note: Israel’. Available at http://www.oecd.org/israel/48215127.pdf (accessed 1 February 2014). 183. IMF, table showing general government total expenditure as a percent of GDP, Europe. Available at http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/ weorept.aspx?sy¼ 2000&ey ¼ 2010&scsm ¼ 1&ssd ¼ 1&sort ¼ country&ds ¼ .&br ¼ 1&c ¼ 122%2C136%2C124%2C423%2C138%2C172%2C182% 2C132%2C134%2C174%2C184%2C178&s ¼ GGX_NGDP&grp ¼ 0&a ¼ &pr.x ¼ 60&pr.y ¼ 12 (accessed 1 February 2014). 184. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 48. 185. Index Mundi, ‘Research and development expenditure (% of GDP) – Country Ranking’. Available at http://www.indexmundi.com/facts/indicators/GB.XPD. RSDV.GD.ZS/rankings (accessed 1 February 2014). 186. US Embassy in Cairo, Cable 4972, 5 June 2005. Available at http://wikileaks. ch/cable/2005/06/05CAIRO4972.html (accessed 1 February 2014).

NOTES 187. 188. 189. 190.

191. 192. 193.

194.

195.

196. 197. 198.

199. 200.

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313

Ibid. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012). Ibid., (2012), pp. 302 –7, 379. The numbers above were obtained from the suit filed by Egypt’s Prosecutor General against Mubarak and other officials charging them with high treason. The suit was written jointly with ‘Abd el-Khalek Farouk, economic expert and head of the Nile Center for Economic and Strategic Studies, ‘Ammar ‘Ali Hasan, Professor of Sociology, writer and journalist and Jurist Fikri Kharroub, Chief Justice of the Alexandria Court of Appeals. The document is published at the Nile Center for Strategic Studies, 18 May 2012. Available at http:// nilecss.com/index.php/news/general-news/116-2012-05-18-18-32-31 (accessed 7 January 2013: link no longer working). Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 366, 399 – 400. Farouk, Al-Qawanin al-Iqtisadiyya al-Mufsida, p. 246. Markaz al-Ard li Huquq al-Insan, ‘Ta‘dilat qanun al-ta’min al-ijtima‘i wa salb huquq al-‘amilin fi Misr’, Economic Rights Series No. 29, May 2003, pp. 7, 45– 6. ‘Abd el-Nour Boukhamkham, ‘Al-Naqabat al-mihaniyya fi Misr.. Harb al‘ishrin sana ma‘a Mubarak’, El-Shourouk, 26 January 2012. Available at http://www.echoroukonline.com/ara/articles/121121.html (accessed 1 February 2014). Safaa Abdoun, ‘Workers’ demos intensify during first half of 2011’, Daily News Egypt, 3 July 2011. Available at http://www.dailynewsegypt.com/2011/07/03/ workers-demos-intensify-during-first-half-of-2011/ (accessed 1 February 2014). Also see Awlad al-Ard original reports, statistics cited at http:// menasolidaritynetwork.com/2011/08/09/egypt-strike-statistics-for-20092011/ (accessed 1 February 2014). For more on labour activity, see Egypt Worker Solidarity Organization website at http://www.egyptworkersolidarity. org/ (accessed 1 February 2014). Kamal Khalil and Kamal ‘Abbas, interviews, 2012. El-Beblawi, interview, 2012. See interview with Mervat al-Tellawi, Zaynab Ibrahim, ‘Al-Safira Mervat alTellawi: Istila’ al-maliyya ‘ala amwal al-ta’minat ghayr dustouri’, Al-Ahram alIqtisadi, 21 November 2011. Available at http://digital.ahram.org.eg/articles. aspx?Serial¼ 708610&eid ¼ 383 (accessed 1 February 2014). Markaz al-Ard li Huquq al-Insan, ‘Ta‘dilat qanun al-ta’min al-ijtima‘i [. . .]’. Egyptian wheat imports have been rising since the 1960s. However, the trend experienced a sharp rise in 2002. Coincidentally, US exports to Egypt have increased 89 per cent since 2000. Office of the United States Trade Representative, ‘US goods trade with Egypt’. Available at http://www.ustr. gov/countries-regions/europe-middle-east/middle-east/north-africa/egypt; also see Index Mundi, ‘Egypt wheat imports by year’: http://www.indexmu ndi.com/agriculture/?country¼ eg&commodity ¼ wheat&graph ¼ imports. All accessed February 1, 2014.

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201. Index Mundi, ‘Wheat imports by country’. Available at http://www. indexmundi.com/agriculture/?commodity¼wheat&graph ¼ imports (accessed 1 February 2014). 202. See this example from 1985: A. Marani and M.J. Pinthus, A.M. Abdel-Shafy and A.S. Badawi, ‘Egypt– Israel –US agricultural research project: trinational agricultural technology exchange and cooperation in a similar ecosystem’, USAID, 1 October 1985 to 31 March 1986. Available at http://pdf.usaid.gov/ pdf_docs/PDAAU776.pdf (accessed 1 February 2014). 203. See USAID, ‘Middle East Regional Cooperation (MERC)’. Available at http:// www.usaid.gov/where-we-work/middle-east/merc (accessed 1 February 2014). 204. Abd el-Jawad Tawfiq, ‘Wali Bada’a al-tatbi‘ al-zira‘i qabl an yatawalla alwizara’, Al-Ahram, 12 May 2011. Available at http://digital.ahram.org.eg/ articles.aspx?Serial¼503756&eid ¼ 5358 (accessed 1 February 2014). 205. A simple Google search combining the terms al-tatbi‘ (normalization), Egypt, al-taba‘iyya (subordination) and al-‘aduww (the enemy) yields more than half a million hits. If the name of the largest circulation daily Al-Ahram is included, then the results number more than 85,000. These themes were present in the mainstream discourse, such as Al-Ahram al-Iqtisadi, to opposition political party newspapers, like al-Ahali, to anti-normalisation and anti-imperialist groups, like Al-Lajna al-Misriyya li-Munahadat al-Isti‘imar wa al-Suhyouniyya – http://pcr.misrians.com/print_topic.php?sisn¼ 13&tisn ¼ 54. There were also conferences and symposia covering this issue: see, for example, the symposium held at al-Majlis al-A‘la li al-Thaqafa – the highest cultural centre in Egypt – in 2009 by cultural foundations such as the Nationalist Center for Translation and the ‘Oweiss Educational Organization; Mayy Abu Zeid, ‘Jaber ‘Asfour: al-Tarjama ‘an al-‘Ibriyya tatbi‘ wa Isra’il latazal al-‘aduww al-haqiqi’, Rose el-Youssef Daily, 11 November 2009. Available at http://www.masress. com/rosadaily/28487 (both accessed 1 February 2014). 206. Mohsen, ‘Mukhattatat Suhyouniyya [. . .]. 207. For example, Ibid.; Ahmed, Al-Muqawama 4; the official platform of the Egyptian Revolutionary Socialists, ‘Al-Karama wa al-taharrur al-watani’; Egyptian Revolutionary Socialists, 7 April 2012. Available at http://e-socialists. net/node/8597 (accessed 1 February 2014); and Shawqi, ‘Al-Tatbi‘ al-Misri alSuhyouni ba‘d thawrat Yanayer’.

Chapter 3 Qualified Industrial Zones and Natural Gas: Remapping the Economy for ‘Warm Peace’ 1. William I. Robinson, Promoting Polyarchy: Globalization, US Intervention, and Hegemony (Cambridge, Cambridge University Press 1996), pp. 633 – 4 argues that implementation of the liberal vision requires two projects: an economic one manifested in neoliberal structural adjustment which requires coercion to order space and function and a political one that consolidates power by using

NOTES

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3.

4.

5.

6.

7.

8.

9.

10.

11.

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315

consensual mechanisms of social control, including pluralist politics. Both are more easily achieved in polyarchic political systems. These results are in line with Stephen Gill’s findings about the implementation of neoliberal reforms. Stephen Gill, ‘The global panopticon? The neoliberal state, economic life, and democratic surveillance’, Alternatives: Global, Local, Political 20/1 (January – March 1995), pp. 1 – 49. Stephen Gill (ed.), Gramsci, Historical Materialism and International Relations (Cambridge, Cambridge University Press, 1993); Stephen Gill and David Law, ‘Global hegemony and the structural power of capital’, International Studies Quarterly 33/4 (December 1989), pp. 475– 99; Simon Springer, ‘Violence, democracy, and neoliberal “order”: the contestation of public space in post transitional Cambodia’, Annals of the Association of American Geographers 99/1 (2009), pp. 138 – 62. This result accords with Robinson’s argument that the neoliberal project generates ‘seeds of social instability and conditions propitious to the breakdown of polyarchy’. Robinson, Promoting Polyarchy, p. 655. ‘Abd el-Khalek Farouk and Reda Sa‘id, ‘Ma’zaq al-iqtisad al-misri ‘ashiyyat Thawrat 25 Yanayer wa kayfiyyat al-khurouj minhu’, El-Magless el-Watani. Available at http://www.almaglesalwatany.org/economics.aspx (accessed 1 February 2014). See also Farouk, Iqtisadiyyat al-Fasad fi Misr: Kayf Jara Ifsad Misr wa al-Masriyyeen (1974–2010), (Cairo, Maktabat al-Shurouk al-Dawliyya, 2011). Ran Dagoni, ‘Egypt’s Industry Minister tells “Newsweek”: QIZ agreement a “huge thing”’, Globes, 18 April 2005. Available at http://www.globes.co.il/s erveen/globes/docview.asp?did¼905869 (accessed 1 February 2014). Wael Gamal, ‘QIZ: Egyptian jeans under the patronage of The Muslim Brotherhood’, Al-Ahram (English), 19 January 2013. Available at http://english. ahram.org.eg/NewsContentPrint/4/0/62748/Opinion/0/QIZ-Egyptian-jeansunder-the-patronage-of-The-Musl.aspx (accessed 1 February 2014). Ministry of Economy, Israel, ‘Qualifying Industrial Zones – QIZ’s’. Available at http://www.moital.gov.il/NR/exeres/2124E799-4876-40EF-831C-6410830 D8F02.htm (accessed 1 February 2014). For more on the ‘cold peace’ from the perspective of a pro-Israel think tank, see Ehud Yaari, ‘Israeli-Egyptian peace: forty years after the 1973 war and holding’, The Washington Institute, 2 October 2013. Available at http://www. washingtoninstitute.org/policy-analysis/view/israeli-egyptian-peace-fortyyears-after-the-1973-war-and-holding (accessed 1 February 2014). Ahmed Farouk Ghoneim and Taleb Awad, ‘Impact of Qualifying Industrial Zones on Egypt and Jordan: a critical analysis’, paper presented at the Virtual Institute UNCTAD meeting, Geneva, 4– 7 May 2009. Egyptian activism over natural gas issues extends beyond the famous court challenges and popular activism against its sale to Israel. For example, scientist, activist and founder of the Arabic Wikipedia al-Ma‘refa, Na’el elShaf‘ie, exposed another problem that became a media sensation. He alleged

316

12. 13.

14.

15.

16.

17.

18.

19.

20.

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that Israel had redrawn the maritime borders and drilled for oil and natural gas in Egyptian territorial waters in the Mediterranean. Neither the Egyptian government of Hosni Mubarak nor the post-Mubarak governments have addressed the issue. For more, see: Na’el el-Shaf‘ie, ‘Dirasa takshif sariqat alkiyan al-suhyouni li-tharawatina al-petroliyya al-mawjouda bi-miyah al-bahr al-mutawassit’, El-Sha‘b, 9 June 2012. Available at http://www.elshaab.org/ thread.php?ID¼26036 (accessed 1 February 2014). ‘Abd al-Khalek Farouk, Iqtisadiyyat al-Fasad fi Misr (Cairo, Dar al-Shourouk al-Dawliyya, 2011), p. 53. Dina Jadallah, ‘Hiding the state: on exploiting land and natural gas’, Counterpunch, 3 August 2009. Available at http://www.counterpunch.org/ jadallah08032009.html (accessed 1 February 2014). According to the treaty, to qualify to enter the US the product must be transformed so that ‘material and processing costs incurred in a QIZ must total not less than 35 per cent of the appraised value of the product. Of this 35 per cent, 20 per cent must come from Israel and Jordan or Egypt, and 15 per cent may be either US materials or materials from Israel, the West Bank/Gaza Strip and/or Jordan or Egypt, depending on the participating QIZ programme. The remaining 65 per cent can come from anywhere in the world.’ Mary Jane Bolle, Alfred B. Prados and Jeremy M. Sharp, ‘Qualifying Industrial Zones in Jordan and Egypt’, Congressional Service (CRS) Research Report for Congress, 5 July 2006, p. 2. Available at http://www.au.af.mil/au/ awc/awcgate/crs/rs22002.pdf (accessed 1 February 2014). Avni Patel, ‘Where’s Mubarak’s money? Ask ‘front man’ Hussein Salem’, ABC News, 1 March 2011. Available at http://abcnews.go.com/Blotter/mubaraksmoney-front-man-hussein-salem/story?id¼12985639 (accessed 1 February 2014). Ibrahim ‘Isawi, ‘Al-Dirasat al-mustaqbaliyya wa mashrou‘ Misr 2020’, Kurrasat Istratijiyya, No. 96 (Cairo, Markaz Al-Ahram li al-Dirasat alSiyasiyya wa al-Istratijiyya, 2000), p. 17. Fareed Zacharia interview with Rachid Mohammed Rachid, Global Public Square, CNN, 6 February 2011. Available at http://www.youtube.com/watch? v¼ bMl69v2C_Qc (accessed 1 February 2014). Wafa’ Mohsen, ‘Mukhattatat suhyouniyya li-tadmir al-zira‘a al-misriyya bimubidat musartina. Al-Tatbi‘ al-zira‘i bayna Misr wa Isra’il’, Akhbar al-Yom, 2 April 2009. Available at http://www.akhbaralyom.net/news_details.php?s id¼8285 (accessed 1 February 2014). Rif‘at Sayyed Ahmed, ‘Muqawamat al-tatbi‘: Dirasa fi al-tajruba al-Misriyya (1979 – 2006)’, Ma‘had al-Ma‘arif al-Hikmiyya (2011). Available at http:// www.shurouk.org/StudyDetails.aspx?ID¼112 (accessed 1 February 2014). ‘Protocol between the Government of the Arab Republic of Egypt and between the Government of the State of Israel on Qualifying Industrial Zones’, from the website of Ministry of Industry and Foreign Trade. Available at http ://www.mfti.gov.eg/english/Agreements/qiz.htm (accessed 1 February 2014). Specifically, Article II on the QIZ Joint Committee states: ‘A. The Parties

NOTES

21. 22.

23. 24.

25.

26.

27.

28.

29.

30.

TO PAGES

157 –160

317

hereby agree to the establishment of a QIZ Joint Committee which shall have the responsibilities, outlined in Annex B, of identifying those manufacturers located within the Qualifying Industrial Zones, which involve substantial economic cooperation between Israel and Egypt. Goods processed in these zones by manufacturers whose names appear on a list (hereinafter “the list”) approved by the QIZ Joint Committee shall be eligible for duty-free entry into the United States if the goods meet the requirements of this Protocol and its Annexes as well as of the legislation and proclamation. B. The QIZ Joint Committee shall meet in Jerusalem and in Cairo, alternately, every three months or upon request by either Party whichever comes earlier. During every fourth quarter the QIZ Joint Committee shall hold a business cooperation event in which business people and other persons of both Parties who have interest in the QIZ shall have the opportunity to participate. This event shall be held in Egypt and Israel alternately. C. A representative of the United States shall have the right to participate in meetings of the QIZ Joint Committee as an observer.’ Interview, Kamal Khalil, 2012. Manal al-Ghamry, ‘Injazat al-Quiz mahdouda’, Al-Ahram, 24 October 2010. Available at http://digital.ahram.org.eg/articles.aspx?Serial¼302779&eid ¼ 791 (accessed 1 February 2014). Ghoneim and Awad, ‘Impact of Qualifying Industrial Zones’. IMF, ‘Energy subsidy reform: lessons and implications’, 28 January 2013. Available at http://www.imf.org/external/np/pp/eng/2013/012813.pdf (accessed 1 February 2014). Muhammad Waked, ‘Al-QIZ: Kizba man yusadiquha?’ Markaz al-Dirasat alIshtirakiyya – Misr, 1 December 2006. Available at http://www.e-socialists. net/node/5609 (accessed 1 February 2014). Al-Naggar, Al-Inhiyar al-Iqtisadi fi ‘Asr Mubarak: Haqa’iq al-Fasad wa al-Batala wa al-Ghala’ wa al-Rukoud wa al-Duyoun (Cairo, Al-Majlis al-A‘la li al-Thaqafa, 2012), pp. 130 – 2, 136 – 7. For the texts of the treaties, see: Ministry of Industry and Foreign Trade. Available at http://www.mfti.gov.eg/english/agreements.htm (accessed 1 February 2014). Ministry of Trade and Industry, Qualifying Industrial Zones, Investment Portal website. Available at http://www.qizegypt.gov.eg/about_faq.aspx (accessed 1 February 2014). Ministry of Investments, ‘Economic indicators’. Available at http://www.inves tment.gov.eg/ar/EconomicIndicators/Pages/invind.aspx (accessed 1 February 2014). ‘Tatawwur ‘adad al-sharikat al-jadida allati tamma ta’sisaha hatta shahr Ibril 2010’, Ministry of Investments. Available at http://www.investment.gov.eg/ ar/EconomicIndicators/Documents/Apr-2010-yearAr.pdf (accessed 1 February 2014). The reported profits of the cement and steel publicly-traded (privatised, monopoly) companies experienced sharp increases that coincided with the

318

31. 32.

33. 34. 35. 36. 37.

38. 39. 40. 41. 42. 43. 44. 45. 46.

47. 48.

49.

50. 51.

52.

53.

NOTES

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160 –167

building of the Separation Barrier in Israel and the Occupied Territories. Numbers cited in Farouk and Sa‘id, ‘Ma’zaq al-Iqtisad al-Misri [. . .]’. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 144, 415. General Authority for Investments and Free Zones (GAFI), Annual Report Fiscal Year 2008– 2009. Available from http://www.gafi.gov.eg/en/ (accessed 2 February 2015), pp. 9 – 10. For that role, he was nicknamed Minister of Liquidation by critics (Wazir al-Tasfiyyat). Al-Naggar, interview, 2012. GAFI, Annual Report Fiscal Year 2008– 2009, p. 17. Ibid., p. 62. Ibid., p. 17. Al-Naggar (ed.), ‘Taqyim iqtisadi li-hasad ‘am mada ‘ala protocol el-QIZ alMisri’, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006 (Cairo, Markaz AlAhram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2006), pp. 383–94, 388–9. GAFI, Annual Report Fiscal Year 2008– 2009, pp. 81 – 2. Ibid., pp. 16 – 7. Ibid., p. 49. Ibid., p. 27. Ibid., p. 9. Ibid., pp. 32 – 3. Ibid., pp. 21 – 6. Ibid., pp. 80, 31. Dania Saadi, ‘Egypt to create 15 industrial zones to double exports’, Bloomberg, 20 June 2006. Available at http://www.qizegypt.gov.eg/images/pc_Egypt_ Create15_Ind.pdf (accessed 1 February 2014). Egypt’s Central Agency of Public Mobilization and Statistics, reporting numbers from the United States Department of Commerce, 2012. Central Agency of Public Mobilization and Statistics, ‘Egyptian trade with the world, 2012’. Available at http://www.tpegypt.gov.eg/ftrade/page1.aspx (accessed 2 February 2014). Al-Tayyeb al-Sadiq, ‘Raghm tawafur muqawimatuha: Al-Sina‘a al-Misriyya min sayye’ ila aswa’, Al-Ahram, 24 September 2011. Available at http:// digital.ahram.org.eg/articles.aspx?Serial¼ 648280&eid ¼ 493 (accessed 2 February 2014). Israeli Ministry of Economy, ‘Qualifying Industrial Zones’. Selmi al-Wardagi, ‘Al-Mukawwin al-Misry fi sadirat ‘al-Quiz’ la yatajawaz 11%’, Al-Ahram, 10 November 2013. Available at http://digital.ahram.org. eg/Economy.aspx?Serial¼ 1456641 (accessed 2 February 2014). Al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, p. 388. Comparing Tables 3.2 and 3.3 above reveals that Israeli data differ from the Egyptian data. Vikash Yadav, ‘The political economy of the Egyptian – Israeli QIZ Trade Agreement’, Middle East Review of International Affairs 11/1 (March 2007), pp. 74 – 96, n.10.

NOTES

TO PAGES

167 –177

319

54. Index Mundi, ‘Egypt exports’. Available at http://www.indexmundi.com/g/ g.aspx?c¼ eg&v ¼ 85 (accessed 2 February 2014). 55. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 273 – 4, 342. 56. Al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, pp. 388 – 9. 57. GAFI, Annual Report Fiscal Year 2008– 2009, p. 53. 58. Al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, p. 389. 59. US Census Bureau, ‘US trade in goods with Egypt, 2003– 2012’. Available at http://www.census.gov/foreign-trade/statistics/product/enduse/exports/ c7290.html and http://www.census.gov/foreign-trade/balance/c7290.html (both accessed 2 February 2014). 60. Ihab Shawqi, ‘Al-Tatbi‘ al-Misri al-Suhyouni ba‘da thawrat Yanayer’, in Rif‘at Sayyed Ahmed, Al-Muqawama 4 (April 2012), pp. 25– 56, p. 41. Also see, alNaggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 121– 313. 61. Ilhami al-Mirghani, ‘Al-Taghayyurat fi bunyat al-tabaqa al-‘amila al-misriyya’, Markaz Dirasat wa Abhath al-Marksiyya wa al-Yasar, 1 July 2009. Available at http://www.ahewar.org/debat/s.asp?aid¼176711&t ¼ 4 (accessed 2 February 2014). See also Ilhami al-Mirghani, Khalid ‘Ali ‘Omar, ‘Adel Walim and Mahmoud al-Mansi (eds), ‘Ummal Misr 2009, Report No. 63 (Cairo, Egyptian Center for Economic and Social Rights/Mu’assassat Awlad Ard li-Huquq alInsan, 2010). Available at ecesr.org/contents/uploads/2010/07/worker09_0.doc (accessed 2 February 2014). 62. Egyptian Ministry of Investments, GAFI, Annual Report Fiscal Year 2008– 2009, pp. 41, 44. 63. Al-Jazeera, ‘Ittifaqiyyat al-Quiz’, Al-Jazeera, 21 November 2005. Available at http://www.aljazeera.net/home/print/787157c4-0c60-402b-b997-1784ea 612f0c/1dff2a70-8267-43cb-984a-e53f3f79c112 (accessed 2 February 2014). 64. Rif‘at Sayyed Ahmed, interview, 2012. 65. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), pp. 131 – 2, 135. 66. Kamal Khalil, interview, 2012. 67. For a history of the book fair and the controversies surrounding Israeli participation, see Sarah Sanad, ‘Fi ma‘rad al-kitab. Al-Amn qabl al-kutub wa fawq al-muthaqqafin’, Al-Youm al-Sabi‘, 30 January 2009. Available at http ://www.youm7.com/News.asp?NewsID¼67351#.UpuJM9JDuSo (accessed 2 February 2014). 68. Kamal Khalil, interview, 2012. 69. Baha’ al-Tawil, ‘Mas’oul bil-ta‘awun al-dawli yattahim al-khamsa al-kibar fi ‘lobby al-Quiz’ bi al-‘amal didd al-maslaha al-‘amma’, Al-Youm al-Sabi‘, 2 April 2009. Available at http://www.youm7.com/News.asp?NewsID¼84738#.Upu LFtJDuSo. See also ‘Ittifaqiyyat Quiz’, 21 November 2005; Aljazeera. Available at http://www.aljazeera.net/specialfiles/pages/1dff2a70-8267-43cb-984ae53f3f79c112 and Muhammad Nabil Al-Shaymi, ‘Al-Quiz ittifaq murr althamara’, Al-Hiwar, 4 October 2012. Available at http://www.ahewar.org/ debat/show.art.asp?aid¼326831 (all accessed 2 February 2014).

320

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178 –182

70. See polls of business people conducted by Al-Ahram Center for Political and Strategic Studies; al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, pp. 431– 54. 71. All the statistics in the paragraphs about the surveys are calculated or cited directly from ibid. 72. Baha’ al-Tawil, ‘Khamsat rijal a‘mal faqat istafadou min al-Quiz fi khams sanawat: Galal al-Zorba wa ‘Alaa ‘Arafa wa Muhammad Qasim wa Khalid Baha’ wa Isma‘il Abu al-Siba‘ al-lobby al-aqwa lil-Quiz’, Al-Youm al-Sabi‘, 18 December 2009. Available at http://www1.youm7.com/News.asp?News ID¼167284&SecID ¼ 230&IssueID ¼ 0 (accessed 2 February 2014). 73. Ahmed al-Sayyed al-Naggar (ed.), ‘Al-Ma‘ounat al-Amrikiyya li al-duwal al‘Arabiyya: al-Waqi‘ wa al-shurout wa ihtimalat al-mustaqbal’, in Al-Ittijahat al-Iqtisadiyya al-Istratijiyya (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2009), pp. 173– 7, p. 175. 74. Waked, ‘Al-QIZ: Kizba man yusadiquha?’. 75. Salah Gouda, ‘Al-Ma‘ouna al-Amrikiyya’, Blog, 2 August 2012. Available at http://blogs.mubasher.info/%D8%A7%D9%84%D8%AE%D8%A8%D8% B1%D8%A7%D8%A1/%D8%AF%D9%83%D8%AA%D9%88%D8% B1-%D8%B5%D9%84%D8%A7%D8%AD-%D8%AC%D9%88%D8% AF%D9%87/%D8%A7%D9%84%D9%85%D8%B9%D9%88%D9%86% D8%A9-%D8%A7%D9%84%D8%A3%D9%85%D8%B1%D9%8A% D9%83%D9%8A%D8%A9 (accessed 2 February 2014). 76. Office of the United States Trade Representative, ‘Egypt’. Available at https:// ustr.gov/countries-regions/europe-middle-east/middle-east/north-africa/egypt (accessed 9 March 2015). 77. Gouda, ‘Al-Ma‘ouna al-Amrikiyya’. For a summary of other opposition economists’ research into privatisation in Egypt, see ‘Ula ‘Issawi and Muna Imam, ‘Al-Khaskhasa. hikayat bay‘ ’usul Misr: Siyasa fashila’, Masress, 19 July 2011. Available at http://www.masress.com/akhersaa/3174 (accessed 2 February 2014). See also, ‘Al-Ma‘ouna al-Amrikyya: Sanawat al-furas al-da’i‘a li al-iqtisad al-Misri’, Alarab, 15 November 2012. Available at http://www.alarab.co.uk/ ?p¼9895 (accessed 2 February 2014). Another very important study of the ill effects of US aid and of privatisation, see Farouk, Iqtisadiyyat al-Fasad fi Misr. 78. Al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, pp. 297 – 8. 79. United Nations Development Program (UNDP), ‘Egypt’s Progress towards achieving the Millennium Development Goals, 2010’. Available at http:// www.undp.org/content/egypt/en/home/library/mdg/publication_2/ (accessed 16 February 2015). 80. The IMF reports official Central Bank numbers. Al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, pp. 297–8. 81. As a reference point, unemployment in the early 1980s in Egypt was only at 3 per cent. UNDP, ‘Egypt’s progress’, p. 22. Available at http://planipolis.iiep. unesco.org/upload/Egypt/Egypt_MDG_progress_report_2010.pdf (accessed 2 February 2014).

NOTES

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321

82. Central Agency for National Mobilization and Statistics, 2009 Yearbook, (Egypt, 2009). Available at http://www.capmas.gov.eg/pdf/book_years/2009. pdf (accessed 2 February 2014; link no longer working). See also, al-Naggar, Taqrir al-Ittijahat al Iqtisadiyya al-Istratijiyya, 2006, p. 348. 83. See al-Mirghani, ‘Al-Taghayyurat fi Bunyat al-Tabaqa al-‘Amila al-Misriyya’. 84. Kamal Khalil, interview, 2012. 85. One major effect of privatisation is that it increases inequality, at least in the short term. Nancy Birdsall and John Nellis, ‘Winners and losers: assessing the distributional impact of privatization’, World Development 31/10 (2003), pp. 1617 –33. 86. Abu Zeid, interview, 2012. 87. Waked, ‘Al-QIZ: Kizba man yusadiquha?’. 88. Egypt State Information Service, ‘Egypt and Syria’. Available at http://www.sis. gov.eg/En/Templates/Articles/tmpArticles.aspx?ArtID¼49378#.VQJVeI7F-So (accessed 2 February 2014). 89. Ministry of Industry and Foreign Trade, Egypt, ‘Egyptian foreign trade with economic group’. Available at http://www.tpegypt.gov.eg/Statistics/ Egyptian_Geographic_%20group.pdf. Also, see Alexander Simoes, ‘Trade in Egypt’, Observatory of Economic Complexity. Available at http://atlas.media. mit.edu/country/egy/ (both accessed 2 February 2014). 90. Index Mundi, ‘Foreign direct investments’. Available at http://www.indexmu ndi.com/facts/egypt/foreign-direct-investment (accessed 2 February 2014). 91. Ahmed al-Sayyed al-Naggar, ‘Fi zilal ‘asifat September: Iqtisadat Misr wa al‘Arab wa al-‘alam’, Kurrasat Istratijiyya 111 (Cairo, Markaz Al-Ahram li alDirasat al-Siyasiyya wa al-Istratijiyya, 2002), p. 43. 92. Al-Naggar (ed.), Taqrir al-Ittijahat al-Iqtisadiyya al-Istratijiyya (2006, 2007, 2008, 2009, 2010). 93. Hazem el-Beblawi, Arba’at Shuhour fi Qafas al-Hukumah (Cairo, Dar alShurouq, 2012), pp. 91– 3. 94. UNDP, ‘Egypt’s progress’, pp. 20– 1. 95. Farouk, Juzour al-Fasad al-Iqtisadi fi Misr, pp. 347– 9. 96. According to al-Naggar, the same pattern and rationalities underlie US aid provision to Jordan and the Occupied Territories and are intended to make armed resistance to Israel less likely. Al-Naggar, ‘Al-Ma‘ounat al-Amrikiyya li al-Duwal al-‘Arabiyya’, p. 176. 97. Waked, ‘Al-QIZ: Kizba man yusadiquha?’. 98. The company that was the designated exporter for Egyptian natural gas in 2005, East Mediterranean Gas (EMG) was owned by Egyptian businessman and Gamal Mubarak’s crony, Hussein Salem, the Mirhav Group (Israeli), Ampal (American) and BTT (Thai and American billionaire, Sam Zell). Ahmad Mukhtar, ‘Haqiqa gha’iba fi tasdir ghaz Misri ila Isra’il’, Al-Ahram alIstratiji, 1 April 2010. Available at http://digital.ahram.org.eg/articles.aspx? Serial¼155013&eid ¼ 1580 and Zaynab Mekki, ‘Dughout Amrikiyya liziadat al-ghaz al-Misri li-Isra’il bil idafa li-khafd al-se‘r’, Moheet, 16 November

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103. 104. 105. 106.

107. 108. 109.

110.

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113.

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2009. Available at http://www.masress.com/moheet/112231 (both accessed 2 February 2014). Mukhtar, ‘Haqiqa gha’iba fi tasdir ghaz Misri ila Isra’il’. Mekki, ‘Dughout Amrikiyya li-Ziadat al-Ghaz al-Misri [. . .]’. ‘Egypt: Middle East oil refineries (Midor)’, Entrepreneur.com, 7 January 2008. Patel, ‘Where’s Mubarak’s money? Ask “front man” Hussein Salem’. The CEO of Dorad is Reserve General ‘Amos Yaron, who was indicted by a Belgian court in 2003 for his involvement in the Sabra and Shatila massacres in 1982. Lauri King-Irani, ‘Universal jurisdiction: still trying to try Sharon’, MERIP, 30 July 2002. Available at http://www.merip.org/mero/mero073002 (accessed 2 February 2014). Farouk, Iqtisadiyyat al-Fasad fi Misr, p. 53. Media Line Staff, ‘New Egypt –Israel gas deal signed’, Allheadlinenews.com, 28 July 2009. Khalid al-Shami, ‘Paris unfreezes the assets of Bank Misr, and the Egyptian government seizes the assets of Siaj’, Al-Jazeera, 1 August 2009. Khaled al-Shami and Zuheir Andraus, ‘Egyptian ambassador Ibrahim Yusri: new deal to export gas to Israel means Egypt is now a private estate’, Al-Quds el-‘Arabi, 30 July 2009. Adam Morrow and Khaled Moussa al-Omrani, ‘Egypt: opposition slams gas sale to Israel’, IPS News, 25 February 2008. Gamal Essam el-Din, ‘Sales strategies’, Al-Ahram Weekly, 26 February – 4 March 2009. Mahmoud Saʽd ed-Din, ‘Ambassador Ibrahim Yusri: Ittifaqiyyat bay‘ al-ghaz liIsra’il batila’, interview, Al-Fikr al-‘Arabi, 1 October 2008. Available at http:// www.alfikralarabi.org/modules.php?name¼News&file ¼ article&sid ¼ 2877 (accessed 2 February 2014). Misbah Qitbu and Lubna Salah el-Din, ‘Al-Masry Al-Youm tanshur alwatha’eq al-sirriyya li-safqat tasdir al-ghaz li-Isra’il wa takshif dawr Suleiman’, Al-Masry Al-Youm, 26 June 2011. Available at http://today.almasryalyoum. com/article2.aspx?ArticleID¼ 301838 (accessed 2 February 2014). Ibid. Ashraf ‘Umran, ‘Nanshur nass haythiyyat ahkam qadiyyat tasdir al-ghaz liIsra’il.. Al-Muttaham fiha Fahmi wa Salem wa akharoun’, Al-Ahram, 28 June 2012. Available at http://gate.ahram.org.eg/NewsContent/4/7/225691/% D8%AD%D9%80%D9%88%D8%A7%D8%AF%D8%AB/%D9%85% D8%AD%D8%A7%D9%83%D9%85/%D9%86%D9%86%D8%B4% D8%B1-%D9%86%D8%B5-%D8%AD%D9%8A%D8%AB%D9%8A% D8%A7%D8%AA-%D8%A3%D8%AD%D9%83%D8%A7%D9%85-% D9%82%D8%B6%D9%8A%D8%A9-%D8%AA%D8%B5%D8%AF% D9%8A%D8%B1-%D8%A7%D9%84%D8%BA%D8%A7%D8%B2-% D9%84%D8%A5%D8%B3%D8%B1%D8%A7%D8%A6%D9%8A% D9%84-%D8%A7%D9%84%D9%85.aspx (accessed 2 February 2014). Ibid.

NOTES 114. 115. 116. 117. 118.

119.

120.

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122.

123.

124. 125. 126. 127.

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Ibid. Qitbu and Salah el-Din, ‘Al-Masry Al-Youm tanshur [. . .]’. ‘Umran, ‘Umran, ‘Nanshur nass haythiyyat [. . .]’. Ibid. Nazir Majalli, ‘Qadiyyat al-ghaz bi al-arqam wa al-ma‘loumat’, Al-Sharq alAwsat, 27 April 2012. Available at http://www.aawsat.com/details.asp?article¼ 674530 (accessed 2 February 2014). ‘Abd el-Rahman Shalabi, ‘Sharikat Hussein Salem li al-ghaz hasalat ‘ala 400,000 metr fi Sina’ bi $1.3 li al-metr’, Al-Masry al-Youm, 8 April 2011. Available at http://www.masress.com/almasryalyoum/483373 (accessed 2 February 2014). Omar Suleiman received funds outside of official US aid to ensure the proper policing of the border, including the tunnels, with Gaza and to manage the relationship with the Palestinians. Dina Shehata, interview, 2012. Christopher Hope, ‘WikiLeaks: Suleiman told Israel he would “cleanse” Sinai of arms runners to Gaza’, Telegraph, 9 February 2011. Available at http://www. telegraph.co.uk/news/worldnews/wikileaks/8314459/WikiLeaks-Suleimantold-Israel-he-would-cleanse-Sinai-of-arms-runners-to-Gaza.html (accessed 2 February 2014). See also, Jeremy Sharp, ‘Egypt: background and US relations’, Congressional Research Service, 2 September 2009. Available at http://www. policyarchive.org/handle/10207/bitstreams/2506.pdf (accessed 2 February 2014). Mahmoud ‘Abdu, ‘Al-Tatbi‘ wa al-thawra al-Misriyya’, in Rif‘at Sayyed Ahmed (ed.), Al-Muqawama, 4 April (Cairo, Markaz Yafa li-l-Dirasat alIstratijiyya, 2012), pp. 7 –24, p. 21. Egypt is already a net importer of energy, according to international energy expert, Salama ‘Abd el-Hadi. See Amani Salama, ‘Dr Salama: Mashrou‘ alDhab’a ukzuba.. wa mustaqbal al-taqa karitha’, Al-Wafd, interview, 25 October 2012. Available at http://www.alwafd.org/%D8%AD%D9%88%D8%A7% D8%B1%D8%A7%D8%AA-%D9%88%D9%85%D9%84%D9%81%D8% A7%D8%AA/95-%D8%AD%D9%88%D8%A7%D8%B1%D8%A7%D8% AA%20/287425-%D8%AF-%D8%B3%D9%84%D8%A7%D9%85%D8% A9-%D9%85%D8%B4%D8%B1%D9%88%D8%B9-%D8%A7%D9% 84%D8%B6%D8%A8%D8%B9%D8%A9-%D8%A3%D9%83%D8% B0%D9%88%D8%A8%D8%A9-%D9%88%D9%85%D8%B3%D8% AA%D9%82%D8%A8%D9%84-%D8%A7%D9%84%D8%B7%D8% A7%D9%82%D8%A9-%D9%83%D8%A7%D8%B1%D8%AB%D8% A9 and Ibrahim Nawwar, ‘Waqf Tasdir al-Ghaz’, Al-Ahram al-Iqtisadi, 30 April 2012. Available at http://digital.ahram.org.eg/articles.aspx?Serial¼ 884798&eid ¼ 13 (both accessed 2 February 2014). Al-Naggar, ‘Fi zilal ‘asifat September’, p. 39. Sa‘d ed-Din, ‘Ambassador Ibrahim Yusri’, interview. Rif‘at Sayyed Ahmed, interview, 2012. Kamal Khalil, interview, 2012.

324

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128. Sa‘d ed-Din, ‘Ambassador Ibrahim Yusri’, interview. 129. Ibid. 130. UN Treaty, Vienna Convention on the Law of Treaties (1969). Available at http://untreaty.un.org/ilc/texts/instruments/english/conventions/1_1_1969.p df (accessed 2 February 2014). 131. This was the same argument that the regime had used for QIZ. 132. Sa‘d ed-Din, ‘Ambassador Ibrahim Yusri’, interview. 133. This article provides a collection of critical views, including those of intellectuals and insiders involved in the negotiations for the treaty and Egyptian Foreign Ministry officials: Rania Badawi, ‘Al-Masry al-Youm takshif asrar malaf tasdir al-ghaz li-Isra’il’, Al-Masry al-Youm, 26 July 2011. Available at http://www.almasryalyoum.com/node/480674 (accessed 2 February 2014). 134. ‘Imad Gad, ‘Tanaghum Isra’ili Amriki’, Mukhtarat Isra’iliyya 81 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2001), p. 2; ‘Ma‘a man yatafawad al-‘Arab’, Mukhtarat Isra’iliyya 73 (Cairo, Markaz Al-Ahram li alDirasat al-Siyasiyya wa al-Istratijiyya, 2001), p. 2 and ‘Jara’im al-harb al-Isra’iliyya wa al-ma‘ayeer al-muzdawaja’, Mukhtarat Isra’iliyya 84 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2001), p. 2. 135. Muhammad Fahmi Yunis, ‘Mahkama Misriyya taqdi bi-waqf tasdir al-ghaz liIsra’il wa al-hukuma tat‘an fi al-qarar’, Al-Sharq al-Awsat, 19 November 2008. Available at http://www.aawsat.com/details.asp?section¼4&article ¼ 495515& issueno ¼ 10949#.UvvgTmJdWSp (accessed 10 February 2014). 136. Sa‘d ed-Din, ‘Ambassador Ibrahim Yusri’, interview. 137. Ibid. 138. Shalabi, ‘Sharikat Hussein Salem li al-ghaz’. Also see Sa’d ed-Din, ‘Ambassador Ibrahim Yusri’, interview. 139. Al-Sayyed Mustafa Ahmed Abu al-Khayr, ‘Ittifaqiyyat tasdir al-ghaz li alkiyan al-Suhyouni, ru’ya qanouniyya’, in Ahmed, Al-Muqawama 4 (April 2012), pp. 57– 61, 57. 140. Ibid. 141. ‘Umran, ‘Nanshur nass haythiyyat ahkam qdiyyat tasdir al-ghaz li-Isra’il’. 142. Al-Naggar, Al-Inhiyar al-Iqtisadi [. . .] (2012), p. 131. 143. Bel Trew and Osama Diab, ‘The crooks return to Cairo’, Foreign Policy, 7 February 2014. Available at http://www.foreignpolicy.com/articles/2014/02/ 07/the_crooks_return_to_cairo_hussein_salem_egypt (accessed 25 November 2014). 144. M. Cherif Bassiouni, ‘Corruption cases against the officials of the Mubarak regime’, Egyptian American Law Association, 23 March 2012. Available at http://www.earla.org/userfiles/file/Bassiouni%20Corruption%20Cases% 20Against%20Mubarak_EARLA%20Letterhead%20%28march%202012% 29.pdf (accessed 26 November 2014). 145. Ministry of Trade and Industry, Egypt, 2008. Available at http://www.qizegypt. gov.eg/ and http://www.qizegypt.gov.eg/About_QualifiedLocations.aspx. The actual beneficiaries among these companies and the volume of trade from these

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149. 150.

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areas are much fewer: ‘official reports prepared by the US Embassy’s Economic Department, said the number of factories that exported to the US under the QIZ framework amounted to 168 in 2011 and that Egypt’s total QIZ imports reached US$ 97.5 million, while exports amounted to US$ 931 million in fabric, US$ 7.5 million in food, and US$ 924 million in apparel’. Al-Masry AlYoum, ‘US official: QIZ will not be affected by halted gas exports’, 5 September 2012. Available at http://www.egyptindependent.com/news/us-official-qiz-willnot-be-affected-halted-gas-exports (accessed 2 February 2014). ‘Imad Gad and Rif‘at Sayyed Ahmed, interviews, 2012. Ibid. ‘Imad Gad, interview, 2012. Also see Du‘a’ ‘Abd el-Men‘im, ‘Dr ‘Imad Gad’, Al-Ahram, June 17 2010. Available at http://digital.ahram.org.eg/articles.asp x?Serial¼169649&eid ¼ 2504 (accessed 2 February 2014). Rif‘at Sayyed Ahmed, interview, 2012. For example, former Prime Minister ‘Atef ‘Ebeid was accused in various questionable land development deals in Sinai. In one famous dispute with Tourism Minister Mamdouh el-Beltagi and with National Security, ‘Ebeid hastily granted approval for the sale of vast tracts of land in Sinai to Egyptian, Qatari and Italian businessmen who were acting as fronts for Israelis. Al-Masry alYoum, ‘Atef ‘Ebeid ‘harrada’ ‘ala bay‘ aradi Sina’ li al-Isra’iliyyin raghma taqarir al-amn al-qawmi’, 3 June 2007. Available at http://today.almasryalyoum. com/article2.aspx?ArticleID¼ 63247.

Chapter 4 Discourses on Civil Society, Citizenship and Nationalism in the Emerging ‘Market Democracy’ 1. For a literature review of the various types and sources for research on civil society in Egypt, see Mahi Khalaf, ‘Civil society in Egypt: a literature review’, Foundation for the Future, ‘The Reguibak Conference on Research on Civil Society Organizations: Status and Prospects’, Conference, Jordan, 26– 28 January 2010. Available at http://foundationforfuture.org/en/Portals/ 0/Conferences/Research/Research%20papers/Civil_Society_in_Egypt_Mahi %20Khallaf_English.pdf (accessed 2 February 2014). 2. Galal Amin, Al-Muthaqqafun al-‘Arab wa Israel (Cairo, Dar al-Shurouk, 1998), pp. 44 – 8. 3. The experience and nature of citizenship – denoting a link between individual and state or group of states – is difficult to define. Generally, there are two competing views. The liberal-individualist conception (akin to the one promoted by US aid) prioritises the economic nature of humans, the rational pursuit of self-interest, the autonomy of citizens and rule of law and usually results in political passivity (save for periodic elections). The civic-republican conception is somewhat closer to the Gramscian one – prioritising the political nature of humans and citizenship, where active political participation and engagement are promoted in the public sphere. John Greville Agard

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Pocock, ‘The ideal of citizenship since classical times’, in Ronald Beiner (ed.), Theorizing Citizenship (Albany, NY, State University of New York, 1995), pp. 29 – 52. 4. Citizenship, according to scholars, varies depending on location and time. Arthur Stinchcombe argues that citizenship is a function of the extent to which a person controls his or her destiny in the body politic by being able to influence the government – in other words, citizenship has a public and private dimension and is also a normative concept. Arthur Stinchcombe, ‘Social structure and politics’, in Fred Greenstein and Nelson Polsby (eds), Handbook of Political Science, Vol. 3, Macropolitical Theory (Reading, MA, Addison-Wesley, 1975), pp. 601– 6, pp. 602, 605; Pocock, ‘The ideal of citizenship’, pp. 29, 54. 5. See Appendix for the list of interviewees. 6. The World Bank and many leading research centres use the following definition of civil society: ‘The term civil society refers to the wide array of non-governmental and not-for-profit organizations that have a presence in public life, expressing the interests and values of their members or others, based on ethical, cultural, political, scientific, religious or philanthropic considerations. Civil Society Organizations (CSOs) therefore refer to a wide array of organizations: community groups, non-governmental organizations (NGOs), labor unions, indigenous groups, charitable organizations, faithbased organizations, professional associations, and foundations.’ The World Bank, ‘Defining civil society’. Available at http://web.worldbank.org/ WBSITE/EXTERNAL/TOPICS/CSO/0,,contentMDK:20101499, menu PK:244752 , pagePK:220503 , piPK:220476 , theSitePK:228717,00. html (accessed 2 February 2014). This perspective sees civil society as encompassing diverse spaces, actors and institutional forms, of varying formality, autonomy and power – distinct from other forms of social, political and economic organizations in the state (Gabriel Almond and Sidney Verba). Sometimes civil society is more generally understood as embracing free speech, independent judiciary and other elements of democratic society like building tolerance, shared values and trust (Robert D. Putnam). Others consider it the space for dialogue, rational will formation and democratic social interaction (Ju¨rgen Habermas). An alternative approach considers formalized forms of civil society as demographically limited (Partha Chatterjee), as part of a selfinterested globalization (United Nations Partners in Civil Society) and/or neocolonial project by a global elite (Gramscian IR), and as linked to nationalism and ideas of citizenship (Graham Pollock). See Gabriel Almond and Sidney Verba, The Civic Culture: Political Attitudes and Democracy in Five Nations (Newbury Park, CA, Sage, 1989); Partha Chatterjee, The Politics of the Governed: Reflections on Popular Politics in Most of the World (New York, Columbia University, Press, 2004); Robert D. Putnam, Robert Leonardi and Raffaella Y. Nanetti, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NH, Princeton University Press, 1994); Graham Pollock, ‘Civil

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9.

10.

11.

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society theory and Euro-nationalism’, Studies in Social and Political Thought 4 (March 2001), pp. 31– 56: Georg Freidrich Wilhelm Hegel, Philosophy of Right, ed. Allen W. Wood, trans. H.B. Nisbet (Cambridge, Cambridge University Press, 1991), pp. 184, 202; Ju¨rgen Habermas, ‘The public sphere: an encyclopedia article’, trans. Sara Lennox and Frank Lennox, New German Critique 3 (1974), pp. 49– 55. The World Bank, ‘Defining civil society’. Antonio Gramsci, Selections from the Prison Notebooks [1971], ed. and trans. Quintin Hoare and Geoffrey Nowell Smith (New York, International Publishers, 2010), p. 12): ‘What we can do, for the moment, is to fix two major super-structural “levels”: the one that can be called “civil society”, that is, the ensemble of organisms commonly called “private”, and that of “political society” or “the state.”’ These two levels correspond on the one hand to the functions of ‘hegemony’ which the dominant group exercises throughout society and on the other hand to that of ‘direct domination’ or command exercised through the state and ‘juridical’ government. From the theoretical viewpoint of Antonio Gramsci, civil society overlaps but is not congruent with the socio-economic bases of the state. Gramsci’s view of civil society’s relationship with the state is not consistent. In describing Italy during the interwar period, Gramsci defined the state as ‘political society þ civil society’; as the balance between political society and civil society and ‘in concrete reality, civil society and State are one and the same’. This conceptual latitude extends civil society beyond the economic determinism of Marxism and gives it an ideological dimension. On the relationship between the state and civil society, see Gramsci, Prison Notebooks, pp. 12– 3, 160 – 1, 170 and fn. 195, 260 and 263. Gramsci’s definition varies. Ibid. p. 160 fn. 71, pp. 170, 207 – 8 and 263. For the war of position see ibid., pp. 176, 238 – 9. Jason Brownlee, ‘The decline of pluralism in Mubarak’s Egypt’, Journal of Democracy 13/4 (October 2002), pp. 6 – 14. Brownlee demonstrates the rise of authoritarianism under Mubarak from the 1990s to 2002. Evidence of executive decrees, increased use of military courts and the deployment of security forces in pursuit of Islamist militants show that Egypt deliberalised by higher placing controls on opposition parties, elections, Islamist activity, civil society organisations and the press. The term ‘bourgeoisie’ in Marxism denotes the social class that owns the means of production. The bourgeois class interest is to preserve capital in order to ensure their economic dominance in society. Joseph Schumpeter viewed the creation of the bourgeoisie, especially entrepreneurs, as the driving force behind capitalism. This class, in his view, takes risks, brings innovations to industries and the economy. See Encyclopedia of Marxism, ‘Bourgeois society or capitalism’. Available at http://www.marxists.org/glossary/terms/b/o. htm#bourgeois-society (accessed 2 February 2014); Joseph A. Schumpeter, Capitalism, Socialism, and Democracy [1942], 2nd edn (New York, Harper and Brothers, 1947), pp. 83– 4, 134.

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12. For the classical twentieth-century work on the role of civil society and political organisations in building better awareness and a more informed citizenry that would hold government to account, see Almond and Verba, The Civic Culture. Neoliberal ideology’s conception of civil society is criticised as a concept to legitimise the demise of and substitute for the welfare state. See Clive Barnett, ‘Publics and markets: what’s wrong with neoliberalism?’, in Susan Smith, Sallie Marston, Rachel Pain and John Paul Jones III (eds), The Sage Handbook of Social Geography (London and New York, Sage, 2010). 13. See Sana’ al-Masri, Tatbi‘ wa Tamwil: Qissat al-Jam‘iyyat Ghayr al-Hukumiyya, Vol. 1 (Cairo, Markaz al-Nadim li-l-Abhath wa al-Ma‘lumat, 1998). 14. Ibid. 15. Citations from Gramsci, Prison Notebooks: ‘A social group can, indeed must, already exercise “leadership” before winning governmental power (this is indeed one of the principal conditions for the winning of such power); it subsequently becomes dominant when it exercises power, but even if it holds it firmly in its grasp, it must continue to “lead” as well.’ (57) ‘A crisis occurs, sometimes lasting for decades. This exceptional duration means that incurable structural contradictions have revealed themselves (reached maturity) and that, despite this, the political forces which are struggling to conserve and defend the existing structure itself are making every effort to cure them, within certain limits, and to overcome them. These incessant and persistent efforts [. . .] form the terrain of the “conjunctural” and it is upon this terrain that the forces of opposition organise.’ (178) 16. For more on how institutions mediate the political sphere, see Sven Steinmo, ‘What is historical institutionalism?’, in Donatella Della Porta and Michael Keating (eds.), Approaches in the Social Sciences (Cambridge, Cambridge University Press, 2008), pp. 118– 38. Available at http://spot.colorado.edu/ , steinmo/HI.pdf (accessed 2 February 2014). See also Sven Steinmo, Kathleen Thelen and Frank Longstreth, Structuring Politics: Historical Institutionalism in Comparative Analysis (Cambridge, Cambridge University Press, 1992). 17. Ehud Yaari, ‘Israeli-Egyptian peace: forty years after the 1973 war and holding’, Washington Institute, Policy Watch 2149, 2 October 2013. Available at http://www.washingtoninstitute.org/policy-analysis/view/israeliegyptian-peace-forty-years-after-the-1973-war-and-holding (accessed 2 February 2014). 18. For general overviews of the history of Egyptian civil society, see Mustapha Kamel, ‘A civil society in Egypt?’, in Augustus Richard Norton (ed.), Civil Society in the Middle East, Vol. 1 (New York, E.J. Brill, 1995), pp. 269 – 93. See also Hassanein Tewfik, State and Development in Egypt, Political Aspects: Comparative Study (in Arabic) (Cairo, Research Center on Developing Countries, Cairo University, 2000), pp. 211–9. 19. Ninette S. Fahmy, The Politics of Egypt: State-Society Relationship, (London, Routledge, 2002).

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20. Gamal Hamdan, Shakhsiyyat Misr: Qira’a fi ‘Abqariyyat al-Makan, (Cairo, Dar al-Hilal, 2001). 21. Hamdy A. Hassan, ‘Civil society in Egypt under the Mubarak regime’, Afro Asian Journal of Social Sciences 2/2.2 (Quarter II: 2011). Available at http://pap ers.ssrn.com/sol3/papers.cfm?abstract_id¼2346637 (accessed 25 February 2015). 22. Maha M. Abdelrahman, Civil Society Exposed: The Politics of NGOs in Egypt (London, Tauris Academic Studies, 2004). 23. See Maha Abdelrahman, ibid., for a review of the history of voluntary associations in Egypt. Her work is an excellent counter to the literature that equates opposition to US funding of civil society organizations with rejection of ‘Western democracy’. 24. See al-Masri, Tatbi‘ wa Tamwil. 25. Suheir Morsy, ‘Uncivil society’, Al-Ahram Weekly 756, 18 – 24 August 2005. Available at http://weekly.ahram.org.eg/2005/756/bo10.htm (accessed 2 February 2014). 26. Abdelrahman, Civil Society Exposed. 27. Ray C. Bush, ‘Crisis of rural livelihoods, economic reforms and civil society in Egypt’, in Kle´ber B. Ghimire (ed.), Civil Society and the Market Question. Dynamics of Rural Development and Popular Mobilization (New York, Palgrave Macmillan, 2005), pp. 162– 88. 28. See Mustapha Kamel al-Sayyid, ‘Funding virtue: US civil society aid and Islam in Egypt’, in Marina Ottaway and Thomas Carothers (eds.), Funding Virtue: Civil Society Aid and Democracy Promotion (Washington, DC, Carnegie Endowment for International Peace, 2000), pp. 49– 74. 29. Ernest Gellner defines civil society as ‘[. . .] that set of diverse nongovernmental institutions which is strong enough to counterbalance the state and, while not preventing the state from fulfilling its role of keeper of peace and arbitrator between major interests, can nevertheless prevent it from dominating and atomizing the rest of society’. Ernest Gellner, Conditions of Liberty: Civil Society and its Rivals (London, Penguin Books, 1996). The following scholars also contrast civil society to the state: John Ehrenberg, ‘Civil society and the state’, in his Civil Society: The Critical History of an Idea (New York, New York University Press, 1999) and Andrew Reeve, ‘Civil society’, in R.J. Barry Jones (ed.), Routledge Encyclopedia of International Political Economy, Vol. 3, P – Z (London, Taylor & Francis, 2001), pp. 158 –60. 30. See for example publications by the American Chamber of Commerce in Egypt. Available at http://www.amcham.org.eg/ (accessed 2 February 2014). See also, ‘Ayman al-Sayyed ‘Abd el-Wahab, ‘Al-Mujtama‘ al-madani wa qadiyyat al-islah fi al-‘alam al-‘Arabi’, Kurrasat Istratijiyya, Vol. 180 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2007). 31. Amani Qandil, ‘Waraqat al-‘amal, dawr al-munazzamat ghayr al-hukumiyya fi al-tanmiyya, itar nazari’, in Muhsin ‘Awad (ed.), Huquq al-Insan wa alTanmiyya (Cairo, United Nations Development Program and the Arab

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32. 33.

34.

35. 36.

37. 38. 39.

40.

41.

42.

43.

44.

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Organization for Human Rights, 2003), pp. 344–70; Muhammad al-Sayyid Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’, in Muhsin ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat Himayat Huquq al-Insan fi alDustour wa al-Tashri‘at al-Misriyya (Cairo, Foreign Ministry of Egypt and United Nations Development Program, 2000), pp. 274 – 96; Muhammad Fa’iq, ‘Munazzamat huquq al-insan al-Misriyya, ishkaliyyat al-nash’a. wa ufuq al-tatawwur’, ibid., pp. 351– 64, pp. 358, 360. Qandil, ‘Waraqat al-‘amal’. Georg Wilhelm Friedrich Hegel, Elements of the Philosophy of Right, ed. Allen W. Wood, trans. H.B. Nisbet (Cambridge, Cambridge University Press, 1991). Ayman al-Sayyed ‘Abd el-Wahab, ‘Al-Mujtama‘ al-madani wa qadiyyat alislah fi al-‘alam al-‘Arabi’, Kurrasat Istratijiyya, Vol. 180 (Cairo, Markaz AlAhram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2007). Qandil, ‘Waraqat al-‘Amal’, pp. 341– 3. ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya: Ishkaliyyat altahawwul min al-dawr al-ijtima‘i ila al-madani’, Kurrasat Istratijiyya, Vol. 195 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa al-Istratijiyya, 2009), p. 7. Qandil, ‘Waraqat al-‘amal’, pp. 341– 3. Ghada Shahbandar, interview, 2012. Nora Boustany, ‘Dissident lobbies for conditions on US aid to Egypt’, Washington Post, 23 September 2008. Available at http://www.washingtonpost. com/wp-dyn/content/article/2008/09/22/AR2008092202880.html (accessed 2 February 2014). US Department of Defense, ‘Press conference with Secretary of Defense Robert Gates at Cairo, Egypt’, 9 May 2009. Available at http://www.defense.gov/trans cripts/transcript.aspx?transcriptid¼4414 (accessed 2 February 2014). See for example, human rights reports http://www.state.gov/j/drl/rls/hrrpt/ 2006/78851.htm (2006); //www.state.gov/j/drl/rls/hrrpt/2007/100594.htm (2007); http://www.state.gov/j/drl/rls/hrrpt/2009/nea/136067.htm (2009) and http://www.state.gov/j/drl/rls/hrrpt/2009/nea/136067.htm (2010) (all accessed 2 February 2014). US Embassy Cable, 09CAIRO 2167, 25 November 2009, WikiLeaks. Available at https://www.wikileaks.org/plusd/cables/09STATE121356_a. html. US Embassy Cable, 10CAIRO 304, 16 February 2010. Available at http://www.wikileaks.org/plusd/cables/10CAIRO304_a.html (all accessed 2 February 2014). Harold W. Geisel, ‘Embassy Cairo and American presence post in Egypt’, Office of the Inspector General, Report No. ISP-I-10-02A, (12 – 3 November 2009). Available at http://oig.state.gov/system/files/138130.pdf (accessed 10 March 2015). Steven Lee Myers, ‘Once imperiled, US aid to Egypt is restored’, International New York Times, 24 March 2012. Available at http://www.nytimes.com/2012/03/

NOTES

45.

46. 47. 48. 49. 50.

51. 52. 53.

54. 55. 56. 57. 58. 59. 60. 61. 62.

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24/world/middleeast/once-imperiled-united-states-aid-to-egypt-is-restored. html?_r¼0 (accessed 2 February 2014). The EU–Egypt Association agreement states: ‘In line with the new generation of Association Agreements between the EU and its Mediterranean partners, the preamble emphasises the importance of the principles of the United Nations Charter, in particular the observance of human rights, democratic principles and economic freedom. Respect for human rights and democratic principles constitute an essential element of the Agreement.’ European Union External Action. Available at http://eeas.europa.eu/egypt/eu-egypt_agreement/index_en. htm. See also ‘Egypt-EU Partnership Agreement’, Ministry of Industry and Foreign Trade. Available at http://www.mfti.gov.eg/english/Agreements/EUPartnership.htm (both accessed 2 February 2014). ‘Abd el-Wahab, ‘Al-Mujtama‘ al-madani’, p. 33. See for instance Foreign Ministry of Egypt and United Nations Development Program (UNDP), ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat. Ibid. Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’. The Ministry of Foreign Affairs has a permanent division that coordinates human rights work with other government apparatuses and with the Human Rights Council at the United Nations. Mahmoud ‘Allam (Assistant Foreign Minister), ‘Mawqi‘ Misr fi manzoumat huquq al-insan al-‘alamiyya wa dawr wizarat al-kharijiyya al-Misriyya fi tanfithiha’, in ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat, pp. 338–41. General Ahmed Say‘id Suwan, ‘Juhoud wizarat al-dakhiliyya fi majal himayat huquq al-insan’, in ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat, pp. 342 – 50. Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’. Foreign populations were the initial founders of civil organisations, the first being the Greek Society in Alexandria (est. 1821). The first Egyptian civil organisation was a cultural society concerned with the history of Egyptian civilisation (est. 1859). Muhammad Fathi Naguib, ‘Al-Jam‘iyyat al-ahliyya fi Misr, al-waqi‘ wa al-tanzim al-qanuni’, in ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat, pp. 261– 73, p. 265. Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’, p. 289. Naguib, ‘Al-Jam‘iyyat al-ahliyya fi Misr’. Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’, p. 291. Ibid., p. 289. Moheb Zaki, Civil Society and Democratization in the Arab World, Annual Report 2011 (Cairo, Ibn Khaldun Center for Development Studies, 2011), p. 15. Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’, pp. 284 – 5. Fa’iq, ‘Munazzamat huquq al-insan al-Misriyya’, pp. 358, 360. Ibid., p. 356. See Mohamed Agati, ‘Undermining standards of good governance: Egypt’s NGO law and its impact on the transparency and accountability of CSOs’, The International Journal of Not-for-Profit Law 9/2 (April 2007). Available at http://

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66. 67. 68. 69.

70. 71.

72.

73. 74.

75. 76. 77. 78. 79.

80.

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www.icnl.org/research/journal/vol9iss2/special_4.htm (accessed 2 February 2014). Sa‘id, ‘Qanun al-jam‘iyyat al-ahliyya fi Misr, nazariyya naqdiyya’, p. 280. ‘Imad Gad, interview, 2012. For details on the specific requests for reform as well as the lack of substance in their implementation, see Mary Anne Weaver, ‘Pharaohs-in-waiting’, The Atlantic Monthly, October 2003. Available at http://www.theatlantic.com/past/ docs/issues/2003/10/weaver.htm. See also Shadi Hamid, ‘The struggle for Middle East democracy’, The Cairo Review of Global Affairs, 26 April 2011. Available at http://www.aucegypt.edu/gapp/cairoreview/pages/articledetails. aspx?aid¼ 20 (both accessed 12 February 2014). Hussein Tawfiq Ibrahim, ‘Al-Ta‘dilat al-dustouriyya wa mustaqbal al-tatawwur al-siyasi wa al-democrati fi Misr’, Kurrasat Istratijiyya 185 (2008), p. 5. Ibid., p. 6. Zaki, Civil Society, pp. 39– 40. Al-Hay’a al-‘Amma li al-Isti‘lamat, ‘Tarikh al-dustour al-Misri’. Available at http://www.sis.gov.eg/Ar/Templates/Articles/tmpArticles.aspx?CatID¼ 2128. See also, ‘Al-Ta‘dilat al-dusturiyya fi Misr. i‘adat siyagha li-Misr’, Swissinfo.ch, 27 March 2007. Available at http://www.swissinfo.ch/ara/detail/ content.html?cid¼ 5796246 (both accessed 2 February 2014). Hussein Tawfiq Ibrahim, ‘Al-Ta‘dilat al-dustouriyya wa mustaqbal al-tatawwur al-siyasi wa al-demokrati fi Misr’, Kurrasat Istratijiyya 185 (2008), p. 9. James M. Buchanan Jr, Logical Formulations of Constitutional Liberty, Vol. 1 (Indianapolis, Liberty Fund, 1999). See Section V of ‘The constitution of economic Liberty’, Buchanan’s Nobel Prize lecture, 8 December 1986. Available at http://www.nobelprize.org/nobel_prizes/economic-sciences/lau reates/1986/buchanan-lecture.html (accessed 2 February 2014). Sufyan Alissa, ‘The political economy of reform in Egypt: understanding the role of institutions’, Carnegie Middle East Center, No. 5 (October 2007), p. 5. Available at http://carnegieendowment.org/files/cmec5_alissa_egypt_final.pdf (accessed 2 February 2014). Ibid, 6. Gamal Essam el-Din, ‘Parliamentary business’, Al-Ahram Weekly 831 (8 – 14 February 2007). Available at http://weekly.ahram.org.eg/2007/831/eg13. htm (accessed 2 February 2014). US–Egypt Business Council. Available at http://www.usegyptcouncil.org/abou t/ (accessed 2 February 2014). Alissa, Alissa, ‘The political economy of reform in Egypt’, p. 7. Rif‘at Sayyed Ahmed, interview, 2012. Ibrahim, ‘Al-Ta‘dilat al-dustouriyya’, pp. 29– 36. State Department, ‘Nonproliferation, anti-terrorism, demining, and related programs’, p. 127. Available at http://www.state.gov/documents/organization/ 60647.pdf (accessed 2 February 2014). Ibid., p. 128.

NOTES 81. 82. 83. 84. 85.

86. 87. 88. 89.

90. 91. 92. 93. 94. 95.

96. 97.

98. 99.

100. 101.

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Ibid. Ibid., p. 165. Ibid., p. 162. Ibid., pp. 153 – 8. Tahani al-Gebali was made judge in 2003. She described herself as a ‘daughter of the July Revolution (1952)’ and asserted that she never hid her central affiliation. She said her work is guided by the following main values on which she was raised: ‘national justice, national independence, and my Arabness’ (interview, 2012). Tahani al-Gebali, Al-Itar al-Dustouri li Tatbiq al-Madda al-Thaniya min alDustour (Cairo, Dar al-Walid li al-Tiba‘a al-Haditha, 2011), pp. 1– 2. Ibid. Tahani al-Gebali, interview, 2012. Tariq Haggi, ‘Sa‘d Zaghloul wa wihdat ‘anasir al-umma’, Harakat Misr Madaniyya, 10 July 2011. Available at http://civicegypt.org/?p¼7620 (accessed 2 February 2014). al-Gebali, Al-Itar al-Dustouri, pp. 6 – 9. Ibrahim, ‘Al-Ta‘dilat al-dustouriyya’, 2007, pp. 29– 36. Ibid. Ibid, p. 29. ‘Imad Gad, interview, 2012. See WikiLeaks Cables about the United States’ Freedom Agenda and the funding civil rights organisations in Cairo. The cables include a list of recipient-interlocutors with the US Embassy among leaders of civil society organisations): WikiLeaks, Ambassador Margaret Scobey, ‘Outreach to Egyptian democracy and human rights activists’, 08CAIRO941, 7 May 2008, Embassy Cairo. Available at http://www.wikileaks-forum.com/index.p hp/topic,6414.0.html?PHPSESSID¼ 67b0ed2a77ae40f8e8c077ca41617841 (accessed 2 February 2014). Ghada Shahbandar, interview, 2012. Transparency International’s 2010 Corruption Perceptions Index ranked Egypt 98 out of 183 countries, indicating the pervasiveness of corruption, lack of transparency and accountability at all levels of government. Available at http://www.transparency.org/cpi2010/results#CountryResults (accessed 2 February 2014). ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya’, pp. 20 – 1. Jaridat al-Mal, 10 December 2006, Nahdat Misr, 18 June 2006; Al-Masry al-Youm, 5 May 2006: cited in ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al‘Arabiyya’, pp. 20– 1. Ibid., p. 25. See the Concluding Platform of the Marrakesh Conference: Civil Forum EuroMed, EuroMed Non-Governmental Platform, 7 November 2006. Document can be downloaded at www.helpconsumatori.it/data/docs/Final_ DeclarationMarrakech06en.doc (accessed 11 March 2015). Also see, Euro-Med

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102. 103.

104.

105. 106. 107. 108. 109. 110. 111.

112. 113.

114.

NOTES

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225 –228

Partnership, Regional Strategy Paper 2002– 2006 and Regional Indicative Programme 2002 –2004, 6 December 2001. Available at http://www.eeas.eu ropa.eu/euromed/rsp/02_06_en.pdf (accessed 2 February 2014). ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya’, p. 28. Saad Eddin Ibrahim’s Ibn Khaldun Center receives funding from the United States. He sees the development of civil society as an essential part of comprehensive development for state and society. He asserted the ‘concept of civil society does not exist in Arab culture, and that it was generally dormant until the East European Revolutions’. Yet he has used the title of civil society for the centre for 30 years, arguing that they struggled to build the infrastructure for democracy and civil society, which are two sides of the same coin. In the first ten years, the Center built the database – the Human Rights Documentation Initiative. This was followed by ten years of advocacy and expansion of grassroots, voter registration and community development. Advocacy got them into trouble with the regime (interview, 2012). Ibrahim did not delve into the potentially contrary effect of democratic conditionality on the US goal of keeping the Mubarak regime on board with the American agenda on normalization and economic issues. Sa‘d Eddin Ibrahim, interview, 2012. Ibid. Ibid., 2012. Rif‘at Sayyed Ahmed, Min al-Tatbi‘ ila al-Intifada: Sira‘ wa Muqawama (Damascus, Dar al-Fikr, 2002), p. 157. Ghada Shahbandar, interview, 2012. Rif‘at Sayyed Ahmed, interview, 2012. Ahmed, Min al-Tatbi’ ila al-Intifada, p. 17. Ibid., pp. 60, 85, 90. See also, Rif‘at Sayyed Ahmed, Wikr al-Jawasis fi Misr alMahrousa bi al-Watha’eq: al-Malaffat al-Sirriyya li al-Markaz al-Academi alIsraeli bi al-Qahira, (Cairo, Maktabat Madbouli, 1995). Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 159 – 62. Vikash Yadav, ‘The political economy of the Egyptian – Israeli QIZ Trade Agreement’, Middle East Review of International Affairs 11/1 (March 2007), pp. 74 – 96, p. 33. Ahmed ‘Attiyya, ‘Al-Sabt: Nazar al-tahaffuz ‘ala amwal 26 shakhsan min rumouz Mubarak fi rashwat Al-Ahram’, Al-Dustour, 1 January 2013. Available at http://dostor.org/%D8%A7%D9%84%D8%AD%D9%88% D8%AF%D8%A7%D8%AB/%D9%85%D8%AD%D8%A7%D9%83% D9%85%D8%A7%D8%AA/121918-%D8%A7%D9%84%D8%B3% D8%A8%D8%AA-%D9%86%D8%B8%D8%B1-%D8%A7%D9%84% D8%AA%D8%AD%D9%81%D8%B8-%D8%B9%D9%84%D9%89-% D8%A3%D9%85%D9%88%D8%A7%D9%84-26-%D8%B4%D8%AE %D8%B5%D9%8B%D8%A7-%D9%85%D9%86-%D8%B1%D9%85% D9%88%D8%B2-%D9%85%D8%A8%D8%A7%D8%B1%D9%83-% D9%81%D9%8A-%D8%B1%D8%B4%D9%88%D8%A9-%D8%A7%

NOTES

115. 116. 117. 118. 119.

120. 121.

122. 123. 124.

125.

126. 127. 128.

129.

130.

TO PAGES

228 –231

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D9%84%D8%A3%D9%87%D8%B1%D8%A7%D9%85 (accessed 2 February 2014). Ahmed, Min al-Tatbi‘ ila al-Intifada, pp. 115– 20, quoting Jaridat al-Sha‘b, 1 May 1998. Rif‘at Sayyed Ahmed, interview, 2012. Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 62, 224. Ibid. See Reem Abou-el-Fadl, ‘The road to Jerusalem through Tahrir Square: antiZionism and Palestine in the 2011 Egyptian Revolution’, Journal of Palestine Studies 41/2 (Winter 2012), pp. 6 – 26. Sami Sharaf, ‘Min thawrat Yulio wa muwajahat al-fasad, la yasih illa al-sahih’, Al-Muqawama 7 (July 2012), pp. 8 – 28. ‘Aziz Sidqi made those statements at the Journalists Syndicate on 17 November 2002. His speech was later published in Al-‘Arabi 836, 24 November 2002. Quoted in Sharaf, ‘Min thawrat Yulio’, pp. 20, 23. Ibid. Ibid. Rif’at Sayyed Ahmed and ‘Imad Gad, interviews, 2012. Also see, ‘Imad Gad, monthly commentaries in Mukhtarat Isra’iliyya (Israeli Digest): ‘Matha ba‘d fashal Camp David?’, 68 (2000), p. 2; ‘Al-Qimma al-‘Arabiyya was al-‘arbada al-Isra’iliyya’, 76 (April 2001), p. 2; ‘Tanaghum Isra’ili Ameriki’ 81 (September 2001), p. 2; ‘Isra’il al-masdar al-ra’isi li al-irhab’ 83 (November 2001), p. 2; ‘Jara’im al-harb al-Isra’iliyya wa al-ma‘ayir al-muzdawaja’ 84 (December 2001), p. 2. Ahmed Thabit, ‘‘Ilaqat Isra’il al-kharijiyya’, in ‘Imad Gad (ed.), Min Dakhil Isra’il: Al-An wa Munth Nisf Qarn (Cairo, Merit lil-Nashr wal-Ma’loumat, 2002), pp. 527 – 78. Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 90– 1. ‘Imad Gad and Rif‘at Sayyed Ahmed, interviews, 2012. O News Agency (ONA), ‘Qaba’il al-mantiqa al-hududiyya tunazzim mu’tamar janub Rafah li-rafd qarar man‘ milkiyyat al-aradi sharq Sayna’’’, 16 February 2013. Available at http://onaeg.com/?p¼588573 (accessed 2 February 2014). Aya Aman and Aya ‘Amer, ‘Wazir al-zira‘a: Tamlik aradi Sayna’ li-ahliha qariban.’, Masress, 20 October 2012. Available at http://www. masress.com/shorouk/623061 (accessed 2 February 2014). ‘Imad Gad and Rif ʽat Sayyed Ahmed, interviews, 2012. Another prominent and prolific critic who argued that Egypt does not yet have real sovereignty over Sinai because of the Camp David Agreement is Mohammed Seif al-Dawla. See for example, Mohammed Seif al-Dawla, ‘Al-Siyada al-majrouha fi Sina’ – arqam wa haqa’iq’, Al-Arabi, 26 March 2013. Available at http://www.al arabynews.com/?p¼ 85371 (accessed 2 February 2014). Activist and militarised opposition to normalisation between Egypt and Israel had a long history in Sinai. While much of it was religiously-based armed resistance and/or terrorism, there was also armed political resistance.

336

131. 132. 133. 134. 135. 136.

137. 138.

139.

140. 141.

142.

NOTES

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231 – 234

A prominent example of the latter occurred in 1983, when an organisation named Thawrat Misr was established under the leadership of Mahmoud Nour ed-Din, who was an officer, diplomat and former intelligence official. The aim of Thawrat Misr was to eliminate/assassinate the cadre of spies that worked under diplomatic cover. The organisation included a number of former officers and enlisted men, among others, connected by a nationalist-Nasserite ideology. Thawrat Misr conducted multiple attacks that led to the assassination of two Israeli diplomats, two American diplomats, the injury of six Israeli diplomats and an attack on the Israeli exposition at the Cairo International Commercial Expo in 1986. The organisation was exposed and caught when the brother of Nur ed-Din, ‘Issam, was bribed. Ahmad Ibrahim Mahmoud, ‘Tafjirat Sina’ wa tahawwulat zahirat al-irhab fi Misr’, Kurrasat Istratijiyya 167 (September 2006), p. 7. Rif‘at Sayyed Ahmed, interview, 2012. Rif‘at Sayyed Ahmed, ‘Qabl an tughtal Sina’ kama ughtilat ‘am 1967, ru’ya istratijiyya’, Al-Muqawama 7 (July 2012), pp. 29– 33. Qandil, ‘Waraqat al-‘amal’, p. 361. ‘Abd el-Wahab, ‘Al-Mujtama‘ al-madani, p. 22. ‘Abd el-Wahab, ‘Al-Mujtama‘ al-madani, pp. 10–6, 22. Fahima Sharaf al-Din, ‘Al-Ta‘qibat’, in ‘Awad, Al-Ma‘ayir al-Dawliyya wa Damanat, pp. 371– 5, p. 375. Estimates for the Arab region in general indicate that civil society is about 55 per cent charitable associations, 22 per cent services and care and only a tiny percentage focusing on development for marginalized sectors of society and political and economic rights, which are the areas of greatest need. See, ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al‘Arabiyya’, pp. 7, 28. Ibid. See also Zaki, Civil Society, p. 42. Sahar Nasr, ‘Enhancing access to finance for micro and small enterprises in Egypt’, paper presented at the 10th Global Conference on Business and Economics, 15– 16 October 2010, p. 6. Available at www.gcbe.us/10th_ GCBE/data/Sahar%20Nasr.doc (accessed 2 February 2014). Taha suggests that linking microcredit institutions with each other and organising collective efforts would enhance the ability to meet the real developmental needs of the poor. Sherin Gamaleldin Ahmed Taha, ‘The effectiveness of microcredit programmes on alleviating poverty and empowering women in Cairo, Egypt’, Master’s thesis, University of Agder, 2012. Available at http://www.nb.no/idtjeneste/URN:NBN:no-bibsys_ brage_37438 (accessed 2 February 2014). ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya’, p. 7. James V. Grimaldi and Robert O’Harrow Jr, ‘In Egypt, corruption cases had an American root’, The Washington Post, 19 October 2011. Available at http:// articles.washingtonpost.com/2011-10-19/news/35277258_1_privatizationcorruption-charges-foreign-aid (accessed 2 February 2014). Ibid.

NOTES TO PAGES 234 –239

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143. Ibid. 144. Magdi Salama, ‘Gamal Mubarak lahafa khams miliarat Dolar min bay‘ duyoun Misr’, Al-Wafd, 19 August 2011. Available at http://www.alwafd. org/%D8%A3%D8%AE%D8%A8%D8%A7%D8%B1-%D9%88%D8% AA%D9%82%D8%A7%D8%B1%D9%8A%D8%B1/84684 (accessed 2 February 2014). 145. Amr Adly, State Reform and Development in the Middle East: Turkey and Egypt in the Post-Liberalization Era (London and New York, Routledge, 2012). 146. Mustafa Bassiouni, ‘Qanun al-tazahur fi Misr, al-kalima al-akhira li al-fuqara‘’, Al-Akhbar, 29 November 2013. Available at http://www.al-akhbar.com/node/ 195944 (accessed 2 February 2014). 147. Amira al-Ahl, ‘Muthaqafu wa sahafiyyou Misr. . . Wu‘oud al-tatbi‘ wa wa‘id alnaqabat’, Qantara, 15 October 2009. Available at http://ar.qantara.de/content/ lttby-lthqfy-byn-sryyl-wmsr-mthqfw-wshfyw-msrwwd-lttby-wwyd-lnqbt (accessed 2 February 2014). 148. Ibid. 149. Yaari, ‘Israeli-Egyptian peace’. 150. For the general theory, see Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups [1965] (Cambridge, MA, Harvard University Press, 1971); and ‘Dictatorship, democracy, and development’, The American Political Science Review 87/ 3 (September 1993), pp. 567 – 76. 151. ‘Abd el-Wahab, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya’, pp. 10 – 11. 152. Ghada Shahbandar, interview, 2012. 153. Fa’iq, ‘Munazzamat huquq al-insan al-Misriyya’, pp. 354 –5, 362. 154. Egyptian Organization for Human Rights, ‘The situation of human rights in Egypt 2009: introduction, summary and recommendations’, 14 July 2010. Available at http://en.eohr.org/2010/07/14/the-situation-of-human-rightsin-egypt-2009-introduction-summary-and-recommendations/ (accessed 2 February 2014). 155. Thomas Janoski, Citizenship and Civil Society: A Framework of Rights and Obligations in Liberal, Traditional, and Social Democratic Regimes (Cambridge, Cambridge University Press, 1998). 156. ‘On average, the contribution of opportunity-shaping circumstances to earnings inequality declined from 22 percent in 1988 to 15 percent in 2006. Levels of inequality of opportunity were fairly stable while earnings differentials widened markedly, leading to a decline in the share of inequality attributable to opportunities.’ Nadia Belhaj Hassine, ‘Inequality of opportunity in Egypt’, World Bank Economic Review 26/2 (June 2012), pp. 265–95. Available at http:// elibrary.worldbank.org/doi/abs/10.1093/wber/lhr046?journalCode¼ wber (accessed 2 February 2014). 157. Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 80– 4, 88, 102, 110 – 1. Also Rif‘at Sayyed Ahmed, interview, 2012. 158. Interview with Sami Kleib, ‘Maqass al-raqib ‘ala al-kutub al-‘Arabiyya’, AlJazeera, 12 October 2010. Available at http://www.aljazeera.net/home/print/

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159. 160.

161. 162. 163. 164. 165.

166.

167. 168.

169.

170. 171. 172.

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0353e88a-286d-4266-82c6-6094179ea26d/0d381aa6-6eb4-4301-8248c11d723f9a61 (accessed 2 February 2014). Ahmed, Min al-Tatbi‘ ila al-Intifada, p. 147. See Ahmed al-Sayyed al-Naggar (ed.), Taqrir Al-Ittijahat al-Iqtisadiyya alIstratijiyya, 2009 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa alIstratijiyya, 2006), pp. 383– 90, 121– 51, 182, 150 – 6). See also Galal Amin, Tanmiya am Taba‘iyya, Iqtisadiyya wa Thaqafiyya: Khurafat Sha’i‘a ‘an alTakhalluf wa al-Tanmiyya wa ‘an al-Rakha’ wa al-Rafahiyya (Cairo, Al-Hay’a al-Misriyya al-’Amma li al-Kitab, 1995), Al-Muthaqqafun al-‘Arab wa Israel (Cairoe, Dar al-Shurouk, 1998) and ‘Awlamat al-Qahr: Al-Wilayat al-Muttahida wa al-‘Arab wa al-Muslimin Qabl wa ba‘d Ahdath September 2001 (Cairo, Dar alShurouk, 2002). Rif’at Sayyed Ahmed, interview, 2012. Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 80– 4, 88, 102, 110 –1. Ibid, 112. Yaari, ‘Israeli-Egyptian peace’. One prominent proponent of this argument is economist Galal Amin; see Amin Tanmiya am Taba‘iyya, pp. 21– 31. See for example, Muhammad Nawwar, (ed.), Amraka – la ‘Awlama: Protocolat ‘Colin Powell’ li-islah wa tahzib al-‘Arab (Lazoghli, Jihad li al-Nashr wa alTawzi‘, 2003), pp. 8– 9. See for example, Fahmi Huweidi, ‘Al-‘Amm Sam... wa al-mazid min ta‘miq alAmraka’, and Salama Ahmad Salama, ‘Ta‘lim al-‘Arab bi-29 milion dolar wa 300 milion dolar li-darb al-‘Iraq’, in Nawwar, Amraka la ‘Awlama, pp. 83 –9 and 90 – 1, respectively. Amin, Al-Muthaqqafun al-‘Arab wa Israel, p. 134. Safaa Abdoun, ‘Workers’ demos intensify during first Half of 2011’, Daily News Egypt, 3 July 2011. Available at http://www.dailynewsegypt.com/2011/ 07/03/workers-demos-intensify-during-first-half-of-2011/. Also see, Awlad al-Ard original reports, statistics cited at http://menasolidaritynetwork.com/ 2011/08/09/egypt-strike-statistics-for-2009-2011/. For more on labour activity, see Egypt Worker Solidarity Organization, http://www.egyptworkersolidarity. org/ (all accessed 2 February 2014). Such positions were/are central to the activism of Kamal Khalil and the National Worker Movement (al-Haraka al-‘Ummaliyya al-Wataniyya) that he leads. Other opponents of normalisation include: the Nasserite Party, Hizb al-Tajammu‘; Hizb al-‘Ummal; the Arab Democratic Nasserite Party – which was operating without a licence after 1992; the Revolutionary Socialists; the Egyptian Federation of Workers; various syndicates and professional organisations such as the Artists’, the Lawyers’ and the Journalists’, among others. Rif‘at Sayyed Ahmed, interview, 2012; Ibid., Mawsou‘at al-Tatbi‘ wa alMutabbi‘oun fi Misr, (Cairo, Markaz Yafa li al-Dirasat wa al-Abhath, 2014). Amin, Al-Muthaqqafun al-‘Arab wa Israel. Ibid., pp. 5 – 7.

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173. Ibid, pp. 30 – 3. In another article, Amin states that ‘Israeli imperialism’ is the highest stage of Western imperialism over the Arab nation, economically, culturally and in terms of identity perception and behaviors (‘iqtisadiyyan wa thaqafiyyan wa nafsiyyan’), p. 102. 174. ‘Imad Gad, Rif‘at Sayyed Ahmed, Ahmed al-Sayyed al-Naggar and Kamal Khalil, interviews, 2012. 175. The Israeli forces did not evacuate Sinai fully until the mid-1980s. Moreover, since Armistice Agreement, the multinational forces in Sinai were first under the leadership of the United Nations and then of the United States. The USled forces are currently stationed at North and South Camp(s) Gorah (Rif‘at Sayyed Ahmed, interview, 2012). 176. Ihab Shawqi, ‘Al-Tatbi‘ al-Misry al-Suhyouni ba‘da thawrat Yanayer’, AlMuqawama 4 (April 2012), pp. 25– 56, pp. 25, 31. 177. See previous chapters for various examples and citations, especially ‘Abd alKhalek Farouk, ‘Imad Gad and Ahmed al-Sayyed al-Naggar. 178. Amin, Al-Muthaqqafun al-‘Arab wa Israel, pp. 39– 40, 43. Ahmed al-Sayyed al-Naggar, ‘Imad Gad and Rif‘at Sayyed Ahmed, interviews, 2012. 179. Amin, Al-Muthaqqafun al-‘Arab wa Israel, p. 42.

Conclusion 1. One example discussed in prior chapters is Al-Nasr Boilers, Al-Marajil alBukhariyya, which was privatised and completely disbanded at the behest of the US. Al-Marajil had only one competitor – in Israel – in the region and was essential to Egyptian industrialisation, electricity generation and nuclear industry. Notably, the land on which al-Marajil was built was evacuated and donated by its original inhabitants as a contribution to Nasserite collective development efforts. Mustafa al-Naggar, ‘Mudir al-Marajil al-Bukhariyya yutalib bi-sur‘at tasallum al-dawla li al-sharika’, Al Youm al-Sabi‘, 6 October 2011. Available at http://m.youm7.com/News.asp?NewsID¼ 507037 (accessed 2 February 2014). 2. More elaboration on how the role of extended social struggle (sira‘ ijtima‘i mumtadd) plays in the Arab-Israeli conflict can be read in this collection of essays: ‘Imad Gad (ed.), Isra’il min al-Dakhil: Al-An wa Munth Nisf Qarn (Cairo, Merit lil-Nashr wal-Ma’loumat, 2002). See especially, George Habash, ‘Introduction’, ibid., pp. 6 – 9 and Gad, ‘Al-Bu‘d al-demoghrafi fi masirat alsira‘ wa dawruhu al-mustaqbali’, ibid., pp. 10– 12. 3. ‘Abd el-Wahab, Ayman al-Sayyed, ‘Al-Munazzamat al-ahliyya al-‘Arabiyya: Ishkaliyyat al-tahawwul min al-dawr al-ijtima‘i ila al-madani’, Kurrasat Istratijiyya, Vol. 195 (Cairo, Markaz Al-Ahram li al-Dirasat al-Siyasiyya wa alIstratijiyya, 2009), 14. Also, Ghada Shahbandar, interview, 2012. 4. Muhammad Fathi Naguib, ‘Al-Jam‘iyyat al-ahliyya fi Misr, al-waqi‘ wa altanzim al-qanuni’, in Muhsin ‘Awad (ed.), Al-Ma‘ayir al-Dawliyya wa

340

5.

6.

7.

8.

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251 – 253

Damanat Himayat Huquq al-Insan fi al-Dustour wa al-Tashri‘at al-Misriyya (Cairo, Foreign Ministry of Egypt and United Nations Development Program, 2000), pp. 261– 73, p. 262. Khaled al-Sirgani, ‘Mubarak kana yakhdem Amrika muqabel ta‘widat la yumkin al-masas biha’, Al-Ahram, 16 September 2012. Available at http:// digital.ahram.org.eg/articles.aspx?Serial¼1026013&eid ¼ 1501 (accessed 9 February 2014). Ahmad Sa‘id Tageddin, ‘Al-Khames wa al-‘Ishroun min Yanayer thawrat sha‘b’ (Cairo, Al-Hay’a al-‘Amma li al-Isti‘lamat, 2012), p. 38). Available at http:// www.sis.gov.eg/Ar/Templates/Articles/tmpArticles.aspx?CatID¼ 1786#. UvgWK2JdWSo (accessed 9 February 2014). Sha‘ban was among the leading intellectuals who opposed Sadat’s infitah, market-oriented policies, coining the (famous) phrase ‘iqtisad al-sadah madah’ (the ‘anything goes’ economy) when he was editor of Al-Ahram. Ahmad Baha’ Sha‘ban, ‘Al-Harakat al-ihtijajiyya al-jadida fi Misr’, Al-Hewar al-Mutamadden, 29 January 2008. Available at http://www.ahewar.org/debat/print.art.asp?þ ¼ 0&aid ¼ 123243&ac ¼ 2 (accessed 9 February 2014). Manar Shorbagy, ‘Egyptian views on the politics of Egypt today’, International Political Science Review 30 (2009), pp. 519– 34, pp. 530 – 1. Available at http:// ips.sagepub.com/content/30/5/519 (accessed 26 April 2012).

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INDEX

‘Abbas, Kamal, 144 Abdelrahman, Maha, 206 ‘Abd el-Nasser, Gamal, 14 – 5, 70, 191, 229 ‘Abd el-Raziq, ‘Ali, 222 ‘Abdu, Muhammad, 222 accountability, 17, 22, 99, 101, 119, 121, 129, 131, 148, 236, 238, 242 Advance Democratic Values, Address Nondemocratic Countries and the Enhance Democracy Act (ADVANCE), 9 Afro –Egyptian Organization for Human Rights and Development, 224 agriculture, 45 –7, 89, 104, 114, 121, 140 –1, 146 –7, 156, 159, 164, 175, 196, 238 –9, 243 Ahmed, Rif‘at Sayyed, 6, 27, 90, 125, 176, 220, 226, 228 aid donors, 37, 119, 121, 126, 204, 249 al-‘uruba, see Arabism Al-Ahram, 63, 107, 109, 133, 190, 228, 238 Al-Ahram Center for Political and Strategic Studies, 37, 54, 90 –1, 120, 156, 168, 178, 208, 212, 215, 225, 239

al-Aqsa Intifada, 177 Al-Araby, 131 Al-Ard Center for Human Rights, 54, 144, 209, 237, 240 al-Azhar, 240 Al-Haraka al-Jamahiriyya al-‘Amma, 239 al-Hizb al-‘Arabi al-Dimokrati al-Nasseri, 216 Al-Jam‘iyya al-Misriyya li alNuhud bi al-Musharaka al-Mujtama‘iyya, 226 al-Jam‘iyya al-Shar‘iyya, 225 al-Mahalla al-Kubra, 157, 250 Al-Masry el-Youm, 188 Al-Nadeem Center for the Management and Rehabilitation of the Victims of Violence, 204 Al-Nasr Boilers and Pressure Vessels Manufacturing (Al-Marajil al-Bukhariyya), 70, 82, 133 Al-Sha‘b, 16, 92, 176, 199, 216, 223, 226, 228, 248 al-siyada, see sovereignty, 253 al-souq al-sharq awsatiyya, see Middle East Market Al-Tajammu‘ al-Watani al-Taqadummi al-Wihdawi, 216

Al-Wafd al-Jadid, 216 alignment, 4, 16, 18, 23, 26, 30 –1, 34 – 6, 48, 54 –5, 65, 79, 81, 84, 86, 90, 92, 132, 150, 157, 168, 172, 176, 190, 199, 210 –2, 238, 240, 243, 245 –6, 248 –9, 255 amaliyyat al-salam, see settlement process amendments (constitutional), 216 –19 American Chamber of Commerce, 78 Amin, Galal, 43, 62, 84, 90 –1, 227 –30, 238 – 9, 241, 243 Amin, Samir, 1, 43 Ansaldo, 134 Anti-Terrorism Assistance Fund (ATA), 220 Arab Committee to Support Islamic Resistance (al-Lajna al-‘Arabiyya li-Musanadat al-Muqawama al-Islamiyya), 241 Arab Investment Fund, 144 Arab nationalism, 16, 243 Arab Organization for Human Rights, 208, 212 Arab Renaissance, 229

INDEX Arab– Israeli War 1967, 15–16, 91, 230, 243 1973, 82, 85, 90, 194, 198, 201 Arabism, 21 –2, 26, 30, 238 al-Ard, Markaz, 59, 85, 227 Article, 76, 215, 219 ASEA Brown Boveri, 134 Association of Businessmen (Jam‘iyyat Rijal alA‘mal), 224 Aswan Dam, 15, 230 authoritarianism, 12, 20, 26, 35, 83, 206, 246 autocracy, 27, 43, 148, 207, 229, 242 Babcock-Wilcox, 134 Bayyoumi, Gamal, 167 el-Beblawi, Hazem, 59 –60, 64, 68, 99, 101, 127, 136, 144, 184 Bechtel Corporation, 70 Bedaya (Beginning) Centre, 56 benchmarks, 55, 91, 129, 136, 252 Book Fair, 177, 239 bourgeoisie, 87, 203, 205 Bright Star, 3 Build-to-Operate Transfer Agreements (BOT), 100 bureaucracy, 15, 20, 42, 124, 178, 205, 234 Bush, G.W., 9, 46, 206, 225 business, 7–8, 15, 19, 21, 32, 36, 40 –3, 48 – 9, 54 – 56, 61, 63, 67, 70, 72 – 82, 85, 88 –89, 95, 99, 102, 121 – 2, 125 –7, 134 –7, 139, 142 –4, 150, 152 – 8, 165, 171 – 2, 176 –80, 183, 190, 192, 195, 198, 207, 214, 218 –9, 224 –5, 228, 234 –5, 237, 244 –5, 247 –51, 254 Cairo Society for Peace (Jam‘iyyat al-Qahira li-al-Salam), 228

Camp David, 34, 37, 84 – 5, 90 –1, 122, 153, 155, 190, 192, 195, 201, 239, 241 capitalism/capitalist, 7, 12, 15, 18, 20 –2, 26, 28 – 31, 34 –7, 43, 56, 69, 83, 89, 91 –3, 102, 131, 137, 139, 145, 147, 168, 178, 180, 197, 203, 227, 230, 234, 249 ‘cash cows’, 96, 129 Cash Transfer Program, 65 Center for International Public Enterprise (CIPE), 41, 62, 73–7, 157 Center of Trade Union and Workers Services, 144 Central Agency for Public Mobilization and Statistics (CAPMAS), 100 –1, 139 –41, 146, 159, 168, 175, 182 Central Bank of Egypt, 79, 100, 119, 166, 183, 191 citizenship, 23, 25, 30, 199 – 201, 207, 216, 219, 221 –2, 226, 229, 233, 237, 240 – 2, 246, 254 civil society, 9, 20, 23 –4, 30, 46 –8, 50 – 1, 53 –4, 56, 71 –3, 77, 80, 200 –43, 246 –7, 251 –2 Clinton, Bill, 8– 9, 19 Cohen, Shalom, 132 colonialism/colonialist, 6, 16, 185, 246 Commodity Assistance Program, 145 conditionalities, 33, 40, 65 – 7 consensual domination, 18, 68, 83, 88 constitution, 16, 30, 44, 71, 92, 126, 135, 151, 154, 176, 187, 189 –90, 192 –4, 201, 203 –4, 207, 214 – 29, 249 –51, 254 constitutional reforms, 217 Copenhagen Coalition, 228 Coptic, 233

371 corruption, 8, 18, 26 –7, 44, 61, 67 –8, 74, 83, 92, 94, 102, 119 –20, 127 –9, 131, 133 –5, 137, 144, 148, 179, 196, 199, 205, 207, 224, 229, 234, 236 –7, 245, 248 –9, 253 counter-terrorism engagement, 221 critical/Gramscian analysis, 2, 10 –12, 22, 24, 26, 29 –30, 70, 77, 80, 83, 87, 120, 151 –2, 202 – 3, 205, 217, 237, 254 see also Gramsci, Gramscian critics, 17, 25 – 7, 30, 32, 48, 59, 63, 70 –1, 81, 83 – 4, 89 –90, 95, 99, 199 – 21, 131 –3, 137 –8, 143, 145, 153 – 4, 156, 158, 171, 176, 180, 185 –6, 190, 192 – 4, 199, 201 – 2, 206, 209, 216, 218, 226 –9, 232, 234, 236, 238 –42, 247 –8, 252 Dar al-Ifta’, 240 debt, 7, 42, 60 –1, 64, 70, 91 –2, 94, 98 –100, 102, 126, 130, 133, 142, 179, 229, 234 decentralisation, 20, 67 –8, 77, 128, 148, 162, 220 deficit, 11, 60, 64, 92, 94 – 5, 99 –101, 161, 167, 172, 179, 184, 191, 230 democracy, 1, 2, 4–5, 7 –13, 17 –8, 20 – 2, 24, 28 – 30, 32 – 8, 40, 43, 46 – 8, 53, 62, 71 –3, 77, 79 –81, 83, 92, 124, 129, 148, 200, 202 –3, 205, 207 – 8, 212 –3, 217 –9, 222, 225, 233, 243 –6, 251 democracy, market, 1, 4, 7, 13, 22, 28 –30, 35 –8, 40, 46, 53, 71, 77, 80, 124, 129, 200, 205, 212, 245 –6

372

US ECONOMIC AID IN EGYPT

democratisation, 9–10, 13, 20, 25, 35, 71, 77 –8, 89, 244 denationalisation, 122 Department of Defense, 39, 124 dependence, 16, 23, 26 – 7, 34, 65, 82, 90, 122, 124 – 5, 142 – 143, 145, 163, 196, 209, 215, 228, 240, 242 – 3, 245, 252, 254 development, 5, 7– 8, 10, 15 –7, 19, 25, 32 –5, 41 –3, 45 – 7, 53, 56, 61, 65 –6, 69 – 70, 73 –4, 78, 82, 84 –5, 89 – 93, 95, 99, 101, 105, 108, 120 –2, 126, 128, 132, 134, 136, 138 –9, 143, 148 –50, 153, 158, 162, 164, 167, 181, 184, 193, 196 –8, 202 –4, 206, 208 –9, 212, 219, 223 – 6, 229 – 31, 233 –4, 236, 239 –40, 242 –5, 247, 250 –1, 255 dictatorship, 20, 34, 243 discourse, 1, 6, 10, 12, 17 – 8, 22 – 3, 25 – 8, 30, 34, 36 – 7, 59, 62 – 3, 70 – 1, 80 – 1, 84 – 5, 87, 89 – 92, 121, 124, 126, 129, 132, 136, 138, 143, 145, 148, 151, 153, 158, 172, 193 – 4, 198 – 243, 245 – 6, 249, 253 – 5 divestiture, 33, 53, 94, 96, 114 –6, 118, 247 donor, 20, 32 –3, 36 –7, 41, 54, 68, 71 –3, 76, 78, 119, 121, 126, 129, 137, 148, 179, 204, 206 –7, 209, 215, 218, 224, 248 –9, 251, 255 Eastern Mediterranean Gas Company (EMG), 60, 62, 139, 154 –5, 186 – 90, 192, 194 –6

‘Ebeid, ‘Atef, 42, 48, 63, 75, 102, 127, 133, 145, 156, 181, 188, 196 Economic Free Zones, 163 economic reforms, 8, 20–1, 27, 32, 34–5, 38, 40, 43, 46, 71, 73, 75–6, 89–90, 93, 120, 128, 130, 151, 183, 205, 218, 242 economic restructuring, 152 Egypt Support Fund (ESF), 38 –9, 45, 78 Egyptian Center for Economic Studies (ECES), 54, 61, 78, 234, 242 Egyptian General Petroleum Corporation, 62, 99, 187 –90 Egyptian Organization for Human Rights, 212, 223 –4, 226, 236 –7 Egyptian Organization for Humanitarian Relief and Reconstruction, 225 Egyptian– Lebanese Friendship Society, 225 Egyptianisation, 15, 92 el-‘Arish, 187, 189, 194 Eliezer, Benyamin Ben, 189, 192 Emergency Law, 216 Euro Med Partnership Conference, 225 European Union (EU), 7, 73 –4, 100, 158, 171, 177, 183, 211 –2, 215, 218, 224, 226 expenditures, 20, 34, 68, 127 –8, 137 –8, 143 ‘Ezz, Ahmed, 74, 78, 89, 137 –8, 155 Fahmi, Sameh, 186 – 9, 192, 196 Farouk, ‘Abd el-Khalek, 44, 62, 64, 127 –8, 138, 186, 236 Federation of Egyptian Industries (FEI), 62, 71, 73 –8, 157, 214, 247

al-Filali, Sharif, 227 al-Fiqi, Mustafa, 137 foreign direct investments (FDI), 42, 55 –6, 60, 160, 164 – 6, 183 –4 free market, 1, 2, 4, 7, 9, 14, 17 –8, 26 – 8, 33, 40, 43, 46, 53, 56, 59, 61 –2, 66 Free Officers, 222, 252 Free Trade Agreement (FTA), 18, 36, 46, 154, 172, 178, 218, 249 Gad, ‘Imad, 27, 54, 90, 121, 128, 137 – 8, 193, 197, 215, 223, 229 –31, 239 –41, 243 Gaza, 86, 123 –4, 132, 136, 154, 177, 186, 190, 197, 225, 238 – 9, 253 Gaza–Jericho Agreement, 239 al-Gebali, Tahani, 92, 221 –2 General Agreement on Tariffs and Trade (GATT), 9, 156, 178 General Authority for Investment (GAFI), 161 –4, 172, 188 General Indicator of National Inequality Coefficient (GINI Index), 67, 184 general intelligence, 189, 249 Ghali, Youssef Boutros, 119, 145 Ghneim, General Salah edDin Khayri, 231 globalisation, 2, 7, 9–10, 12 –13, 25 –6, 29, 31, 33 –4, 36, 40, 43, 78, 83 –4, 90, 120 –2, 139, 150, 162 – 3, 199, 227 – 9, 236, 240, 247 –8, 254 Goudah, Salah, 85, 181, 231, 236 governance, 9, 12, 17 –8, 29, 37 –8, 46 – 8, 55, 70, 73 –4, 81, 83 –4, 88, 95 –6, 100, 129, 148 – 9, 212, 225, 233, 245 –6, 248 –9, 251

INDEX Gramsci, Antonio, 87 – 8, 203, 251 Gramscian, 2, 10–2, 22, 24, 26, 29–30, 70, 77, 80, 83, 87, 120, 151–2, 202–3, 205, 217, 237, 254 el-Habbak, ‘Abd el-Wahab, 134, 225 Hamdan, Gamal, 206 hegemony, 2, 10 – 4, 17 –8, 23 –26, 28 –30, 34, 68, 87 –88, 152, 199 –200, 20, 253 –4 ideological, 18, 22, 199 imperfect, 13 – 4, 200 muscular, 30, 70, 132 Heikal, Mohamed Hassanein, 14 High Constitutional Court, 92, 214, 221 Hilmi, Taher, 78 Hussein, Magdi Ahmad, 226 Hussein, Taha, 222, 233 Ibn Khaldun Center for Human Rights, 204, 225 –6 Ibrahim, Saad Eddin, 204, 210 ideology, 2, 39, 143, 203, 247 ihdar al-mal al-‘am, 93, 190 imperialism/imperialist, 1, 16, 21, 34, 37, 222, 229, 238, 241, 243, 246 inclusion, 11 –2, 70, 125, 171, 230, 255 independence, 16, 26 –7, 65, 122, 124, 209, 240, 243, 252 industry, 51, 61, 66, 71, 78, 96, 107, 111, 114, 121, 131, 133, 142, 153, 155 –8, 167, 171, 178, 188, 198, 229, 234, 243 infitah, 14, 84, 91, 137, 143, 220, 239 International Convention on Human Rights (ICHR), 214

International Monetary Fund (IMF), 21, 28, 40 –3, 55 –6, 59 – 61, 67, 92, 95, 98 –101, 119, 126 –7, 133, 139, 144, 158, 163, 218 International Red Crescent, 129 intifada, 21, 136, 177 Investments Law, 127 iqsa’ al-sha‘b, 196, 248 Iraq, 3, 7, 21, 86, 92, 123, 136, 177, 226, 153 Islam, 21 –2, 28, 72, 221 –2, 240 Israel, 2, 4– 7, 10, 12 –4, 17 –9, 22 – 40, 53, 63, 65, 70, 73, 82, 84 –7, 89 –91, 122 –4, 129 – 30, 132, 135 –6, 138 – 9, 142, 146 – 8, 150 –61, 167, 171 – 2, 175 –8, 180 –1, 183 –201, 204, 207 –9, 211 –2, 214, 218, 225, 227 –32, 235, 238 –50, 252 –5 Israeli Academic Center, 227, 235, 242 Istislam, 171, 229, 254 Jam‘iyyat al-Ri’aya li al-Tanmiyya al-Mutakamila, 225 Jaridat al-Sha‘b, 228 Jordan, 19, 46, 129, 157 –8, 172, 193, 199, 218, 237 ‘Judges Revolution’, 216 July Revolution of 1952, 16, 213 Kamel, Ibrahim, 62, 85, 188 kefaya, 21, 86, 127, 216, 223, 229, 253 Khalil, Kamal, 90, 135, 144, 177, 191, 193, 229, 241 Kifaya, 21, 86, 127, 216, 223, 229, 253 Kuwait, 3, 85, 105

373 Labor Party, 226, 229 Labour and Peasant Movement Party, 135 Law 33, 213 –4 Law 43, 168 Law 84 (Law of Associations), 204, 215, 232, 233 Law 153, 214 Law 203, 41, 44, 69 –70, 116 –8, 133 Leahy Amendment, 39, 210 –1 legitimacy, 17, 43, 148, 194, 203 liberal institutionalism, 2, 10 liberalism lobbying, 37 – 8, 125 Magen David Adom Society, 129 Mahfouz, Naguib, 15, 227 maldistribution, 199, 233 marginalisation, 92 marji‘iyya, 222 el-Masri, Sana’, 204 micro-loans, 233 Middle East Market, 238 –9 Middle East Partnership Initiative, 9 Middle East Regional Cooperation Program (MERC), 5 military, 2– 9, 14, 16, 20, 24 –5, 27, 37 –40, 44 –5, 47, 82, 84, 86, 122 –9, 131, 133 –4, 136 –7, 143, 153, 155, 193, 197, 207, 210 –1, 215, 220, 227, 231, 234, 244, 249 military aid, 20, 27, 39 –40, 82, 122 –4, 126, 131, 207, 210, 244 Ministry of Finance, 54, 60 –1, 65, 68, 95, 102, 191 Ministry of Foreign Affairs, 65, 212 –3, 251 Ministry of Interior, 213 Ministry of International Cooperation, 54, 61, 177

374

US ECONOMIC AID IN EGYPT

Ministry of Investments, 42, 55 –6, 102, 119, 160, 162 Ministry of Petrol, 37, 189, 249 Ministry of Social Affairs, 213, 215, 227 Ministry of Social Solidarity, 215, 224, 233 Ministry of Trade and Industry, 96, 153, 156, 219 al-Mirghani, Ilhami, 172 mobilisation, 21, 30, 59, 132, 209, 217, 223, 235 –6 monopoly, 109, 127, 137 – 8, 160, 171, 186, 189 Morsy, Soheir, 34, 72, 90, 206 Mubarak, Gamal, 54, 61, 72, 77 –8, 102, 132, 144, 197, 225, 234 Mubarak, Hosni, 1, 3, 5, 7– 8, 11 –2, 17 – 8, 20 –1, 28, 33, 35 –6, 39 – 41, 44, 46, 54, 63, 72, 79, 83, 86 –7, 89 – 91, 95, 99, 102, 119, 124 –6, 130, 132, 135, 137, 139, 143 –144, 147, 150, 154 –5, 157, 161, 176, 181, 186, 188, 192, 194 –7, 201 –2, 205 – 6, 210, 213 – 6, 218, 226 –9, 240, 243, 245, 246, 249, 252 Mubarak, Susan, 72, 225 multinational corporations, 127 Muslim Brotherhood, 28, 187, 216 muwatana see citizenship, 25, 199, 216, 219, 229 al-Naggar, Ahmed al-Sayyed, 37, 56, 67, 92, 119 – 20, 128, 180, 182, 241, 243 Nasserism/Nasserist, 14, 16 –7, 35 – 6, 131, 151, 201, 205, 234, 247

National Democratic Party (NDP), 28, 78, 96, 125, 137, 154, 156, 191, 216, 218 National Endowment for Democracy, 48, 53, 77, 79 National Endowment for Democracy, (NED), 48, 77 national interest, 6, 30, 89, 151, 199, 209, 220, 247 National Investment Bank, 133, 142 National Labor Movement, 177 national progress, 80, 85, 88 –9, 95, 121, 150, 212 National Security Strategy of Engagement and Enlargement, 8 nationalisation, 8, 15, 92, 122 Natural Gas Treaties, 151 –2, 241, 249 Navon, Yitzhak, 37 Nazif, Ahmed, 8, 19, 32, 42, 55, 66, 78, 95 – 6, 99 –100, 102, 120 –1, 125, 129 –31, 143, 146, 156, 160, 164 –5, 172, 179, 181, 183, 189, 192, 194, 196, 218 neoliberalism, 33, 93 neorealism, 10 ‘New Middle East’, 156, 172, 186 Nile Center for Economic and Strategic Studies, 208 non-governmental organisations (NGOs), 11, 54, 57, 72 –3, 76 – 7, 202, 209 business interest NGO (BINGO), 72 donor organised NGO (DONGO), 72 ‘governmental’ NGO (GONGO), 54, 72, 224 –5 quasi-autonomous NGO (QUANGO), 77

Non-proliferation, Antiterrorism, Demining and Related Programs (NADR), 220 –1 normalisation, 4, 6, 13 –4, 17, 19, 22 –5, 27 – 30, 32, 34, 36 –37, 40, 44, 48, 62, 70 –1, 73, 80, 82, 84 –6, 89 – 90, 92, 121, 130, 135 – 9, 143, 147 – 8, 151 –4, 156 –7, 172, 176 –8, 183, 185 –6, 189, 195 – 202, 204 –5, 209 –12, 214 –5, 226 –9, 232, 235 –6, 238 –43, 245 –54 Obama, Barack, 3, 9, 225 Occupied Territories, 138, 157 Office of the United States Trade Representative, 145, 181 opposition, 3, 9, 13, 22 –4, 26 –8, 31, 34, 36 –7, 40, 44, 53 – 3, 62, 65, 70 – 1, 84, 86 –8, 93, 130 –1, 135 –6, 142, 145, 147, 152, 176 – 7, 181, 186 –7, 193, 195, 198, 207, 216, 229, 231, 235, 242, 251, 253 oppression, 20, 90, 185, 233 Orascom Development Holding, 134 Oslo Agreement, 7, 238 –9 Palestine, 21 –2, 26, 91, 154, 193 –4, 229, 231, 240 parliament, 28, 40, 54, 71, 90, 126, 137, 147, 176, 182, 187, 191, 193, 214 –5, 249 –50 ‘partner in development’ (altanmiya bi al-musharaka), 203, 208 partners/partner allies, 7, 19, 21–3, 26, 29, 32–3, 35, 61, 69, 73, 76–79, 84, 129, 139, 147, 151–2, 154, 165, 185, 196,

INDEX 200–1, 206, 226–7, 234, 246–7, 249–52, 254 peace, 2–8, 10, 13, 17–9, 22–3, 25–8, 30, 31–80, 81–149, 150–99, 201–12, 225–31, 235, 239–45, 254–5 peace treaty (Israeli), 3–5, 10, 13, 25, 34, 37 – 9, 65, 90, 142, 185, 194, 235 Perez, Shimon, 186 political parties, 20, 23, 62, 65, 130, 191, 203, 214, 216 –7, 241 political reforms, 176, 179, 215, 229 polyarchy, 12, 83 poverty, 15, 36, 63, 182, 184, 206, 233 – 4 Powell, Colin, 9 power religious, 137, 222 state, 16, 237 President’s Council, 219 private boxes, 67 – 8, 125 private sector, 41 – 2, 47 – 8, 70, 74 –6, 78, 81, 87, 94, 96, 100, 121 – 2, 130, 139, 142, 144, 151 –2, 163 –4, 168, 172, 178, 181 –2, 219, 224, 230, 232, 237, 249 privatisation, 5, 10, 12 –3, 18, 20, 22 –30, 32, 34 – 5, 37, 40 –4, 48, 53 –4, 56, 59 –61, 63 –79, 81 – 149, 151 – 6, 158, 162 – 3, 179 – 82, 184 –5, 187, 196, 198 – 9, 208, 210, 212 –3, 218, 224, 229 – 30, 234, 236 –7, 240 – 3, 245 –51, 255 production, 11, 15, 22, 25, 29, 32, 56, 59 –62, 70 – 1, 89, 92, 119, 126, 133 –4, 136, 142 –3, 146, 156, 157, 160, 162, 165, 171, 176, 178, 188 –9, 203, 223, 230, 237, 242, 244, 247, 250

public sector, 33, 37, 44, 56, 65, 75, 93 –5, 102, 119 –20, 125 –6, 128, 133, 143, 162, 165, 179, 182, 188, 223 –4, 245 Qualified Industrial Zones (QIZ), 8, 36, 150 –99, 247, 249 Rachid, Rachid Mohamed, 153, 156, 196 realism, 4 recipient, 2, 17, 32, 59, 62, 77, 79, 94, 204, 209–10, 223, 232, 255 reforms, 8, 12 –3, 17 – 8, 20 reorientation, 14, 201, 248 Republican Guards, 125 resistance, 6, 18, 24, 26, 65, 71, 84, 88, 130, 150, 177, 192, 195, 198, 203, 231, 236 – 7, 240 –1, 249, 251, 253 restructuring, 21, 34, 41, 48, 54, 64, 126 – 7, 142, 152 revolution, 12, 16, 21, 55, 59, 74, 87, 90 –2, 158, 177, 180, 213, 216, 221 –2, 252 –3 Revolutionary Socialists, 91, 158 Riccardione, Richard ‘rule of law’ stabilisation, 18, 47, 83 Sa‘id, ‘Abd el-Men‘em, 228 Al-Sadat, Anwar, 14, 191 Salem, ‘Ali, 227 Salem, Hussein, 142, 155, 186 –8, 195 Saudi Arabia, 85, 129, 172, 183, 232 Sawiris, Naguib, 134 Sawiris, Samir, 134 Scobey, Margaret, 5, 38, 48, 53, 123 Separation Wall/Barrier, 89, 91, 138, 160 settlement process, 131

375 Shahbandar, Ghada, 73, 223 –4, 226, 236 Sharaf, Sami, 16, 229 Sharm-el-Sheikh, 155 Shayfeencom (We See You), 86, 224, 236 Shehata, Dina, 120 Sidqi, ‘Aziz, 229 – 30 Sinai, 4, 24, 26, 37, 69, 86, 91, 118, 125, 189, 195 –8, 230 –1, 235, 241, 243 Six-Day War see Arab –Israeli War social justice, 89, 178, 222, 229 socialist revolutionaries, 177 socialist/socialism, 16, 26, 36, 62, 65, 76, 91, 158, 177, 180, 192, 201, 203 – 6, 219 –20, 222 –3, 242 sovereignty, 21, 132, 192, 240 –1, 253 Spain, 186, 193, 199 state, 6, 10, 12, 15, 20, 24, 26, 30, 34, 62, 64, 66 –8, 84 – 8, 101 –2, 139, 143, 151, 155, 158, 177, 185 –6, 193 –4, 198, 201 –3, 205 –6, 216 –23, 236 –8, 249 –54 State Department, 9, 39, 41, 53, 79, 210, 211, 220, 225, 234 State Owned Enterprises (SOE), 127, 142, 218, 247, 250 statist/statism, 23, 55, 65, 85, 121 –2, 151, 203, 205, 247 strategic goals, 1–2, 120, 148 –9, 152, 190, 244 strategic interests, 2, 17, 136, 148, 230, 232 subordination, 10, 27, 32, 36 –7, 40, 82, 90, 93, 122, 130, 147, 181, 185, 193, 228 – 9, 241, 248, 252 –3, 255

376

US ECONOMIC AID IN EGYPT

subsidies, 8, 20, 43, 60, 67, 69, 102, 122, 126 –8, 143, 193, 219 Suez Canal, 4–5, 15, 20, 123, 185, 231 Suleiman, Omar, 132, 188 –90 sulta see power, religious Syria, 3, 183 Taba‘iyya see subordination Tajammu‘, 62, 91, 176 tamsir, 92, 230, also see Egyptianisation tatbi‘, 4, 32, also see normalisation tawrith, 197 al-Tellawi, Mervat, 145 terrorism, 3, 22, 38, 46, 201, 204, 207, 220 –1, 229 transformismo, 12, 14, 80, 87 – 8, 148 transnational, 11 –2, 19, 21, 24 –25, 29, 32, 34, 83, 152, 244, 253 –4 transparency, 17 – 8, 29, 33, 55, 67, 70, 81, 83 –4, 96, 100, 119, 129 –30, 148, 217, 224, 234, 236, 242, 246, 248, 249, 251

Turkey, 158, 188 – 9, 193, 199, 218 umma, 194, 222 unions, 19, 23, 26, 62, 135, 144, 203 United Nations Development Program (UNDP), 162, 181, 208, 212 United States Agency for International Development (USAID), 9, 37, 39 –41, 46 –8, 52, 55 –6, 58 – 9, 61 –9, 71, 73 –4, 76 – 7, 79, 81, 84, 147, 157, 162, 180, 196, 212, 226 –7, 234, 236 – 7 United States of America (USA), 74, 140 –1 US Central Command (CENTCOM), 4 US Inspector General, 37 US –Egypt Business Council, 219 Vienna Convention on the Law of Treaties, 192, 194 Wahba, Mahmoud, 99

Wali, Youssef, 89, 147, 156, 196, 238 – 9 War of Attrition, 197, 230 – 1 ‘war of position’, 11, 202 –3 War on Terror, 3, 39, 221 Washington consensus, 247 Washington Institute for Near East Policies, 235 WikiLeaks, 5, 53, 79, 87, 95, 123, 129 – 30, 142, 234 World Bank, 15, 40, 42, 55, 57, 60, 69, 71, 73, 100, 102, 113, 118 –9, 138, 202, 230 World Trade Organisation (WTO), 8–9, 48, 154, 218 Yafa Center for Strategic Studies, 90, 125 –6 Yom Kippur War see Arab – Israeli War, 1973 Yusri, Ibrahim, 62, 135, 187, 191 –4 Zaghloul, Sa‘d, 222 Zeid, Ahmed Abu, 102, 119, 183 Zionism, 16, 208 Zorba, Galal, 74, 157