Politics Among Elites
A major issue of Egypt's elite politics was the role of the military in the state. Nasser's Free Officers founded republican government and led Egypt's 1952 Revolution from above. Presidents continued to be ex-military men. But as Egypt entered a postrevolutionary phase, Sadat successfully demilitarized the state and depoliticized the officer corps. Without losing control of the military, Sadat was able to change it from the dominant leadership group in the state into a professional force subordinate to legal authority, radically curtailing its policy-making role, even in defense matters. This change was paralleled by a deradicalization that ended the army's role as "defender of the revolution" and as defender of the Arab nation against imperialism.
Long-term developments that were maturing before Sadat took power facilitated his effort. As many Free Officers acquired wealth and married into great families, they were deradicalized. If the Free Officers had originally been the vanguard of the rising middle class against the traditional upper class, by the late 1970s senior officers had become part of a new establishment. Many officers blamed the 1967 defeat on Nasser, the Soviet Union, and socialist measures. They resented Nasser's scapegoating of the high command for the army's failures. In addition, because the defeat could plausibly be blamed on military involvement in politics, it discredited the military's claim to political leadership and enhanced the prestige of nonpolitical professional officers. Nasser stressed professional competence in the post-1967 reconstruction of the army, and many officers themselves became impatient with political involvement that could detract from the mission of defending the front and recovering the land and honor lost in 1967. The fall of scores of politicized officers in the succession struggle with Sadat--in particular, the group around Marshal Abdul Hakim Amir after the June 1967 War (Arab-Israeli war, also known as the Six-Day War) and the Ali Sabri group--removed the most powerful and politicized Free Officers and dissipated remaining radical sentiment in the ranks of the officer corps. In the succession struggle, Minister of War General Muhammad Fawzi stood with the leftist Sabri faction and tried to mobilize the military against Sadat by accusing him of selling out to the Americans, but Chief of Staff General Muhammad Sadiq and the rest of the top brass stood with Sadat and neutralized Fawzi. No doubt the military's stand was affected by the unpopularity of Sabri's effort to build up the state party as a counterweight to the military, his identification with the unpopular Soviet advisory mission, and Sadat's promise to reinstate officers unfairly blamed for the 1967 defeat. But the long tradition of presidential authority established under Nasser seemed the decisive factor in rallying the professional military to Sadat's side. And this victory went far to reinforce the legal supremacy of presidential authority over all other state institutions.
Nevertheless, Sadat was thereafter embroiled in and won two other power struggles with top generals who contested his defense and foreign policies. In 1972 General Sadiq, then minister of war, seemed to challenge presidential prerogatives. Sadiq considered himself entitled, given his role in Sadat's victory and his Free Officer status, to a share in decision-making power. He used rewards, promotions, and the mobilization of anti-Soviet sentiment in the army to build a personal power base. Sadat viewed Sadiq as a mere member of his staff and saw his anti-Soviet advocacy and his links with Libya's Colonel Muammar al Qadhafi, whom Sadat deeply distrusted, as encroachments on presidential authority. Most serious, Sadiq objected to Sadat's plans for a limited war in Sinai to seize a strip of land across the Suez Canal as a prelude to negotiations with Israel. Believing Egypt unprepared for such an ambitious venture, he argued, in a tense meeting of the high command, against any military action, a course untenable for Sadat. Sadat's move against Sadiq was a classic example of his strategy of control over the military. He waited until he had first expelled the Soviet advisers, thus winning for himself the acclaim of antiSoviet elements and taking the wind out of Sadiq's sails. He obtained the support of other top commanders, especially Chief of Staff Saad ad Din Shazli, who had quarreled with Sadiq over authority in the high command, rallied the field commanders by accusing Sadiq of ignoring orders to prepare for war, and quickly replaced Sadiq with General Ahmad Ismail Ali, a personal friend who lacked political ambition. With the help of these allies, Sadat foiled a pro-Sadiq coup attempt.
Not long after, Sadat faced another challenge, this time from General Shazli. The two men quarreled over the conduct of the October 1973 War, each holding the other responsible for the Israeli breakthrough onto the west bank of the Suez Canal. After the war, Shazli was a leading opponent of the decision to rely on the United States at the cost of weakening Egypt's military ability to take action. Sadat rallied the support of other top officers against Shazli, including then Minister of War Ismail, Air Force Commander Husni Mubarak, and Chief of Operations General Abdul Ghani Gamasi. Shazli enjoyed considerable support in the military but either would not or could not mobilize it before the high command decimated his followers in a wave of purges from corps and division commanders on down. While some of his top generals were in the future to disagree with Sadat's policies, none would again overtly challenge them, and when he chose to dismiss them, they offered no resistance.
The army, however, was not free of disaffection. Some junior officers who risked their lives in the "crossing" of the Suez Canal believed Sadat sold out the gains won on the battlefield. There were recurring signs of Nasserite and Islamic tendencies in the ranks thereafter. But most officers remained loyal for several reasons: the legitimacy Sadat won in the October 1973 War, in which the army had redeemed its lost honor; the realization that the alternative to Sadat might be another war in which this gain might be sacrificed; and the privileges and new American weapons Sadat lavished on the officer corps. The stake in infitah business some officers acquired, the acceptance of professionalism among most senior officers, and Sadat's practice of rotating senior commanders had, by the end of his presidency, seemingly reduced the military from leaders of the regime to one of its main pillars.
Under Mubarak the military remained a powerful corporate actor in the political system, and the case of Minister of Defense Abdul Halim Abu Ghazala manifested both the power and limits of the military establishment. Mubarak was initially less careful than Sadat to rotate military chieftains and to balance them with rival officers or with strong civilian politicians. As a result, Abu Ghazala, an ambitious politicized and conservative general, appeared to establish unprecedented power and acknowledged status as the number-two man in the regime. He positioned himself as champion of arms spending, resisting all decreases in the defense budget and pushing for greater autonomy for the armed forces in the political system. He widened the role of the army in the economy, making it a font of patronage, subcontracting to the private sector, and establishing close relations between the Egyptian arms industry and United States arms suppliers. Abu Ghazala also presided over the growth of privileged facilities for the military, a development that made him something of a hero in the ranks. He appeared to stake out positions independent of the president, apparently objecting to Mubarak's soft-line handling of the Achille Lauro terrorist incident in October 1985. Whereas the president sought to step back from the close alliance with Washington, Abu Ghazala was known for his intimate connections to influential Americans.
In 1987 the army had to be called out when the riots of the security police left the government otherwise defenseless. Having saved the regime, Abu Ghazala seemed to have strengthened his position. He even carried influence in the appointment of cabinet ministers. But Abu Ghazala lacked the crucial control over military appointments to turn the army into a personal fiefdom; Mubarak, waking up to the danger, had by 1987 positioned his own men as chief of staff and as minister of war production. Perhaps aided by Abu Ghazala's loss of American support over an arms smuggling scandal, Mubarak had no difficulty removing him from his post in 1989. Generally, Mubarak tried to curb military aggrandizement that diminished the civilian sector. The professionalization of the officer corps, its tradition of respect for legal legitimacy, and the reluctance of an army lacking in national vision or ambition to assume responsibility for Egypt's problems all made it unlikely that any top general could carry the officer corps in an overt challenge to Mubarak.
The Politics of Economic Strategy
The most important decision taken by the Egyptian government since Nasser was Sadat's infitah to foreign and domestic private capital. While the stagnation of the early 1970s raised the issue of economic reform, the decision to implement infitah did not take place in a political vacuum. A number of different elite factions prescribed different solutions to the economic problems. A handful of Marxists favored a "deepening" of the socialist experiment. Another small group called for a rapid move to free-market capitalism. The third, statist trend, led by Prime Minister Aziz Sidqi, stood for a controlled role for private and foreign capital compatible with the dominance of the public sector. In May 1973, Sadat dismissed Sidqi, who was an influential possible rival associated with the Nasser era, and before long outstanding leftists, such as Minister of Planning Ismail Sabri Abdullah, were also forced out. The dominant thinking that emerged advocated creation of a new foreign sector, restriction of the public sector to large industry and infrastructure, and the opening of all other sectors to private capital. Some of Sadat's closest confidants, major figures of the Egyptian bourgeoisie such as Osman Ahmad Osman and Sayyid Marii, played major roles in swinging him toward this option. The legitimacy won in the October 1973 War gave him the strength to make this break with Nasserism.
Egypt's state-dominated economy, Sadat declared, was too burdened by military spending and bureaucratic inertia to mobilize the resources for an economic recovery. But postwar conditions, namely the diplomatic opening to the United States and the new petrodollars in Arab hands, presented a unique opportunity to spark a new economic take-off combining Western technology, Arab capital, and Egyptian labor.
An infitah would also consolidate Sadat's support among the Egyptian landed and business classes and among the state elite who had enriched themselves in office and were seeking security and investment outlets for their new wealth. In addition, Sadat viewed infitah as essential to winning American commitment to Egypt's recovery of the Sinai Peninsula from Israel.
Abdul Aziz Hijazi, a long-time minister of finance and liberal economist with links to Western and Arab capital, was appointed prime minister in 1974, charged with implementing the infitah. To neutralize resistance inside the state, Sadat encouraged a "de-Nasserization" campaign in which all those who had grievances against socialism publicly attacked it for having ruined the economy. As the emerging ills of infitah--inflation and corruption--generated discontent over the new course, Hijazi was sacked, and Mamduh Salim, Sadat's police "strong man," took over as prime minister with a mission to push ahead with infitah, overruling those who were obstructing it and those who were abusing it.
Once infitah was established as Egypt's economic strategy, intraelite conflicts centered on its proper scope and management. These conflicts typically pitted liberalizing economists, who were convinced that a fully capitalist economy would be more efficient than an economy incorporating a public sector, against more statist-minded bureaucrats and state managers, who wanted to reform, rather than to dismantle, the public sector. The latter were often allied with politicians fearful of public reaction to the rollback of populist measures such as subsidies and public- sector employment. One major episode in this conflict came in 1976 over pressures from the International Monetary Fund (IMF) and foreign banks to cut subsidies and devalue the Egyptian pound (for value of the Egyptian pound) as necessary steps in the liberalization of the economy. Sadat's minister of economy, Zaki Shafii, and his minister of finance, Ahmad Abu Ismail, fearful of the consequences on the mass standard of living, urged him to resist pressures for rapid reform. But other economists, chief among them Abdul Munim Qaysuni, argued that Egypt could not afford costly welfare programs if it were to revitalize its productive bases. Top Western bankers, such as David Rockefeller and William Simon, urged Sadat to go beyond half measures if he wanted to make the infitah a success. Sadat overruled his own ministers and replaced them with a new team headed by Qaysuni, who began to cut the subsidies. But decision makers had misjudged their political environment. The subsidy cuts triggered the 1977 food riots, which shattered much of the support Sadat had carefully built up. The government backed down and did not again attempt such a radical cut in the social safety net for the poor.
Managing infitah remained the major problem of public policy under Mubarak. Rather than producing a dynamic capitalist alternative to Nasserite statism, infitah had stimulated a consumption boom that put Egypt in debt and made it heavily dependent on external revenues, which declined in the mid-1980s, plunging the country into economic crisis. Mubarak insisted that infitah would be reformed, not reversed, but the government's freedom of action was limited by conflicting domestic constraints. The interests created under Nasser remained obstacles to capitalist rationalization and belt-tightening. The public sector was still the main engine of investment, and public sector managers and unionized labor tenaciously defended it. The bureaucracy, employing a large portion of the middle class, was a formidable constituency. Meanwhile, Egypt's huge army had not been demobilized, and, indeed, Sadat had bought its acquiescence to his policy by replacing weapons from the Soviet Union with more expensive arms from the United States, for which the military showed a voracious appetite. Marshal Abu Ghazala rejected demands by Prime Minister Ali Lutfi that he pay off Egypt's military debts from revenues of arms sales overseas; instead he plowed funds into subsidized apartments, shops, and sports clubs for the officer corps. Populist "rights" acquired under Nasser had grown into a tacit social contract by which the government provided subsidized food to the masses in return for their tolerance of growing inequality. The contrast between the conspicuous new wealth and the mass poverty generated a moral malaise, making Egypt's debt a political issue. "We're asked to pay the debt," chanted demonstrators in 1986, "while they live in palaces and villas." Thus, attacking populist policies seemed likely to fuel Islamist political activism.
Infitah had itself, however, created interests resistant to reform. A larger and richer bourgeoisie was unprepared to give up opportunities for enrichment or to trim its level of consumption. Any reversal of the course that so favored this class would have cost the regime its strongest social support. Indeed, the increasing power of the bourgeoisie was manifest in its successful veto of several government reform initiatives. Prime Minister Ali Lutfi was expected to produce difficult reforms but was stymied by powerful business interests. The ability of the regime to raise domestic revenues to cope with the financial imbalance was limited because those who could pay represented the government's own support base. Thus, when importers staged demonstrations against increased customs duties, the government rescinded the duties, and the ruling party parliamentary caucus turned back its own government's proposal to tax lucrative urban real estate interests.
Caught between rich and poor, the regime opted for incrementalism. It gradually shaved subsidies, replacing the one piaster loaf of bread with a supposedly better quality, higher priced loaf; raising electricity prices; and eliminating subsidies on feed corn. The regime also partially reformed the exchange rate and raised taxes on imported luxuries. But, unable to undertake radical reform, it chiefly concentrated on negotiations with creditors for a rescheduling of debts, lower interest rates, and new loans to support the balance of payments, merely postponing the day of reckoning.
The growing power of the bourgeoisie and the determination of Mubarak's state to maintain its independence from this class was reflected in another case of economic policy making, a battle over control of foreign currency. The government wanted this control in order to protect the value of the Egyptian pound. In 1985 Minister of Economy Mustafa Said tried to close down black-market money changers who absorbed most workers' remittances but was dismissed when foreign currency dried up and business demanded his head. In 1986 the Lutfi government fell because of a bid by the governor of the Central Bank, Ali Nijm, to rein in the Islamic investment companies that also dealt in foreign currency. The new power of this rising independent bourgeoisie resulted from its ability to disrupt the economy, its payoffs to the press, and its connections to the political opposition and inside the elite itself. In 1988 Prime Minister Atif Sidqi personally led the government's efforts while the companies mobilized the Muslim Brotherhood (Al Ikhwan al Muslimun; also known as the Brotherhood) and the New Wafd Party in defense of the private sector. Aided by financial scandals that damaged depositor confidence, the government brought the companies under its regulative sway, but they retained considerable autonomy. Whereas Mubarak's state was no longer a mere champion of bourgeois interests as was the state under Sadat, neither had it regained the power over society of Nasser's days.
Despite the power of elites, they did not operate in a vacuum. Many of their decisions were reached in response to economic pressures that sharply limited their options. They also had to consider the political consequences of their decisions. The major change from Nasser's era was that the bourgeoisie acquired the capacity to advance and defend its interests in the system; the 1977 riots made clear, however, that mass reaction must also be included in regime calculations. Thus, while the Egyptian state remained essentially authoritarian, decision makers could not ignore societal wishes, nor could they escape environmental constraints.
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