RSIS
presents the following commentary US Freezing of Military Aid to Egypt: How
Much of a
Dent? by James M. Dorsey. It is also available online at this link. (To
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________________________________________
No. 195/2013 dated 16
October 2013
US Freezing of Military
Aid to Egypt:
How Much of a Dent?
By James M. Dorsey
Synopsis
The decision by the Obama administration
to freeze military aid deprives the
Egyptian military of its favourite toys
but does little to weaken its military capability.
It further strains relations with key US
allies in the Gulf, and highlights Washington’s
difficulty in balancing its twin goals
of stability and democratisation in the Middle
East and North Africa.
Commentary
THE OBAMA
administration’s decision to impose sanctions on Egypt’s military-
appointed
government following the killing of 51 anti-military protestors in Egypt
illustrates
the US’ limited leverage on one of its closest allies in the Middle East and
North
Africa. It also reflects its difficulty in striking a balance between
acknowledging
that the
region has entered into an era of messy transition and maintaining close ties
to its counter-revolutionary
allies such as Saudi Arabia.
Washington
had refrained in the past three months to define as a coup the military’s
overthrow of
Egypt’s only democratically-elected president and brutal suppression of
the Muslim
Brotherhood that left more than 1,000 people dead, to avoid being legally
obliged to
cut off aid.
Reinforcing worries about US stance
The aid
freeze comes on the heels of the announcement of a November date for the
start of
court proceedings against ousted president Mohamed Morsi. It is likely to
reinforce
Saudi and Israeli fears that Washington is steering a dangerous course not
only by its
perceived support for fundamental change of the region’s established order
but also by
its willingness to engage with revolutionary Iran, seen by Arab conservatives
as a threat
to their national security.
In
anticipation of the US sanctions, Egyptian interim President Adly Mansour
secured
pledges for
continued support from Saudi Arabia and other cash-rich Gulf states that
have already
funded his government to the tune of US$12 billion. In advance of the coup
against
Morsi, Saudi Arabia had already assured the Egyptian military that it would
compensate
for any loss of US economic and financial aid.
The Gulf’s
support has kept the post-Morsi government afloat but does little to address
Egypt’s
festering, structural economic problems nor does it offer the prospect of
substituting
military hardware for what is the world’s 14th largest armed forces.
Little impact
For now,
that is unlikely to matter much. The Egyptian military, battling a rising
insurgency
in the Sinai, like its Gulf allies has little interest in tinkering with
Egypt’s
1979 peace
treaty with Israel - in retaliation for the sanctions. In longer economic terms
however,
Gulf cash makes Egypt less inclined to embrace painful economic reforms that
can put the
country on a sustainable path of economic growth and ensure a more
equitable
economic development that benefits the population at large rather than a
minority. In
military terms, Egypt, with some 4,000 tanks and 240 F-16 jets and a budget
of $4.21
billion in 2012, is hardly in dire need of additional hardware.
Rather US
military aid served to feed the Egyptian armed forces’ appetite for
sophisticated
American hardware, secure jobs in its military industrial complex and
guarantee
hundreds of millions of dollars in business for American defence contractors.
Ironically,
US military aid also reinforced the military’s position as a force beyond the
control of
the government - a fact that has come to haunt the country in its now stalled
effort to
escape autocracy and move towards a more liberal society.
The
expansion of the state-owned productive sector enabled the military to gain
access
to raw
materials that had been intended for the manufacturing of subsidised goods for
the poorer,
lower ranks of society. US aid that kicked in after Egypt’s peace treaty with
Israel primarily
opened up business opportunities for serving and retired officers, who
consequently
were often focused on their economic rather than military interests.
A secretive monopoly
The
military’s secretive commercial empire and monopoly in certain sectors expanded
from defence
manufacturing into consumer products such as washing machines,
refrigerators
and televisions, tourism facilities, soccer pitches, agriculture, livestock,
butane gas,
slaughterhouses and metal sheeting for construction projects as well as
services and
land reclamation projects.
Often poorly
managed and commercially inefficient, military-owned companies
dominate the
markets for water, olive oil, cement, construction, hotels and gasoline.
They account
for anywhere between eight and 45 percent of the country’s gross
domestic
product. The ministry, which has 40,000 civilian employees, earns an
estimated
US$345 million in annual revenues.
The
military’s economic empire has allowed it to fund the government when necessary
to achieve its
political goals. It injected US$1 billion in 2012 into the central bank to
ease the
country’s cash shortage at a time that the military was in government in the
first 18
months after the toppling of President Hosni Mubarak by a popular revolt.
Food riots
in 2008 prompted military bakeries to distribute bread.
The move
reflected the military’s ability to supply at a low cost basic goods that were
becoming
increasingly expensive as a result of economic liberalisation including the
floating of
the Egyptian pound. “This is why the army is investing in other businesses,
such as
foodstuff and garments, to generate income,” assistant defence minister Major
General
Mahmoud Nasr said last year.
Any
suggestion that the cut-off of US military aid could push the military to
finally
embrace
economic reform is made moot by the
influx of Gulf cash. It is unlikely to be
persuaded of
the need to create a more level playing field, abolish its ability to dictate
to Egypt’s
business elite what commercial activities they can and cannot develop,
shrink its
commercially inefficient empire, and endorse privatisation.
It
nonetheless signals limits to US willingness to endorse autocratic rule that
fails to
uphold some
measure of respect for human rights and more equitable economic
development.
James M. Dorsey is Senior Fellow at the S.
Rajaratnam School of International Studies
(RSIS), co-director of the University of
Würzburg’s Institute for Fan Culture, and the
author of The Turbulent World of Middle East
Soccer blog and a forthcoming book
with the same title.
________________________________________
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