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Ed Webb

(Re)introducing Conscription in the Gulf: From Soft Power to Nation-Building - Arab Ref... - 0 views

  • In the Middle East, the US invasion of Iraq, the Arab Spring of 2011, and the subsequent foreign interventions in Yemen, Syria, and Libya, brought military preparedness and competence to the surface again. This led to a return of compulsory military service not only in countries that are at war and/or under the threat of military intervention but also in other countries. This was the case of certain Gulf countries including Kuwait, Qatar, and the United Arab Emirates (UAE) which historically seldom resorted to conscription.
  • Qatar introduced conscription in 2013, followed by the UAE in 2014. Kuwait, on the other hand, reintroduced it in 2014, having practiced conscription between 1961 and 2001. Until recently, these countries’ militaries were formed by a national officer corps, foreign - mostly Western- expert non-commissioned officers (NCOs), and foreign contract soldiers coming from different countries (Jordan, Yemen, Pakistan, Bangladesh, and Oman)
  • In 2018, not long after Saudi Arabia, the UAE, Bahrain, and Egypt imposed a blockade on Qatar, the Qatari government amended the National Service Law, introducing national service for women and extending its duration for men. While the national service remains voluntary for women over the age of 18, men are now expected to serve a year instead of three or four months. The new law gives eligible men only 60 days after they come of age to apply to the military and stipulates harsher punishment (up to three years in jail plus a fine) for those who fail to do so.
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  • Since the beginning of the 2020s, several articles5Jean-Loup Samaan, “The Rise of the Emirati Defense Industry,” Carnegie Endowment for International Peace, 14 May 2019 https://carnegieendowment.org/sada/79121;  Elenora Ardemagni, “The UAE’s Military Training-Focused Foreign Policy,” Carnegie Endowment for International Peace, 22 October 2020, https://carnegieendowment.org/sada/83033; Melissa Dalton and Hijab Shah, “Evolving UAE Military and Foreign Security Cooperation: Path Toward Military Professionalism,” Carnegie Endowment for International Peace, 12 January 2021,  https://carnegie-mec.org/2021/01/12/evolving-uae-military-and-foreign-security-cooperation-path-toward-military-professionalism-pub-83549; Elenora Ardemagni, “ Building New Gulf States Through Conscription,” Carnegie Endowment for International Peace, 25 April 2018, https://carnegieendowment.org/sada/76178; Elenora Ardemagni, “Gulf Monarchies’ Militarized Nationalism,” Carnegie Endowment for International Peace, 28 February 2019,https://carnegieendowment.org/sada/78472; Zoltan Barany, “Big News! Conscription in the Gulf,” Middle East Institute, 25 January 2017, https://www.mei.edu/publications/big-news-conscription-gulf; Dr. Eman Ahmed Abdel Halim, “Implementation of Military Conscription in the Gulf,” Future for Advanced Research Studies, 12 December 2016, https://futureuae.com/m/Mainpage/Item/2250/pressing-threats-implementation-of-military-conscription-in-the-gulf were written on the economic, social, and geopolitical reasons behind Gulf countries’ shift in military recruitment strategy. The security problems originating from Iran and Yemen, the willingness to exercise soft power in the region along with the volatile energy sector, and the ruptures within the rentier state model are put forward as the main justifications behind the Gulf countries’ developing defense industries and growing their armies. In this context, compulsory military service does play an important role, be it to increase the size of the army, cause deterrence in the region or create new job opportunities and a qualified workforce out of young citizens.
  • can also create intangible moral advantages, and thus have significant effects on these countries’ civil-military relations. The biggest reason for this is the symbiotic relationship that has formed over time between compulsory military service and national sentiment.  In this sense, introducing conscription shows an effort to turn these societies into nations where individuals would be bound to one another by national sentiment and not the rentier state model they have so far known.
  • To raise obedient and productive citizens who wore the same uniform, spoke the same language, and sang the same anthems, education became an important tool in the nation-building process.11Ayşe Gül Altınay and Tanıl Bora, “Ordu, Militarizm ve Milliyetçilik,” Iletişim Yayınları, (2002): 140. In Prussia, this “new form of nationalist socialization” was provided through military establishments with the hope that, after their discharge from military service, men would remain loyal to the state and transfer their sentiment and what they “learned” to the rest of the population.12
  • mandatory military service in these countries should not be seen as a way to efficiently raise strong and competent armies. First, like their Gulf neighbors, neither Qatar, Kuwait, nor the UAE is populated enough to sustain a competent standing army. Most of their populations are made of ex-pats who are not subject to conscription laws. Second, their current system of outsourcing military needs has proven to be efficient in the long run, with all three countries continuing to invest in contracting foreign soldiers to efficiently populate their armies. Therefore, the new conscription laws should be seen as a symbolic move to strengthen nationalistic bonds and ambitions.
  • paradoxically, the exact nationalistic sentiment and loyalty that the Gulf countries try to channel among their citizens can backfire if the people (including the conscripts) were to ever resent the rulers and their policies. This is rather contrary to the long-established coup-proofing strategies25After gaining their independence, most countries in the region (or rather individual leaders) have engaged in various coup-proofing measures to keep their militaries in check. There were different types of coup-measuring strategies. For example, until 2011, Hosni Mubarak, a military man himself, tried to keep the Egyptian military at bay by giving officers and the military institution economic benefits and providing an unfair competition. In Tunisia, Zine El Abidine Ben Ali took a different approach and choose to ouster the military as an institution completely and empowered the police force. In Sudan and Libya, former presidents Bashar and Gaddafi took a more social approach and tried to counterbalance different groups of society, especially the tribal establishments, as a buffer against the military. In the Gulf, the ruling monarchs resorted to using foreign soldiers to keep the military away from social and political affairs as much as possible. that Arab countries followed over the years. However, given the low numbers of citizens that will be drafted each year, the risk of such revolts taking place remains low.
  • In Kuwait, UAE, and Qatar, there are legal sanctions in place against anyone who fails to enlist when they become eligible and conscientious objection is not recognized. This could cause or further the feeling of oppression and resentment and trigger protests and turmoil in these countries. However, at this stage, this risk is low but still a possibility as seen in Thailand, Israel, and Armenia
Ed Webb

COVID-19 drive-thru testing rollout blurs lines between public, private sectors | | Mad... - 0 views

  • Why did the Health Ministry prohibit the private sector from selling PCR tests to citizens? Why did it only bless one private sector company, which offered the service at double the price of its central laboratories?
  • The ministry had designated its central laboratories as the sole PCR test providers, charging LE1,050 per test. Then testing shortages helped foster a black market for tests, a Health Ministry official told Mada Masr. But the government has endorsed just one private company to provide testing: Prime Speed Medical, in which Tamer Wagih, a former executive of President Abdel Fattah al-Sisi’s 2014 election campaign, is a major investor.
  • because the government does not recognize the reference lab’s results, its positive results are not included in Egypt’s official coronavirus numbers
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  • The Ministry of Higher Education got approval from the prime minister to allow a laboratory affiliated with the Supreme Council of University Hospitals to offer testing services for a fee. Since the beginning of March, the laboratory has offered tests for LE2,600 and has signed contracts with public and private entities to test their employees.Then, the Higher Education Ministry-affiliated laboratory contracted Prime Speed to offer drive-through testing to people for LE2,000, which is double the price determined by the Health Ministry.
  • Asked whether Prime Speed sends information on patients whose coronavirus tests come back positive to the Health Ministry, an official at the drive-through service says that his company does not deal with the ministry, nor does it provide it with any information. Yet he also emphasized that they coordinate operations with all relevant bodies, without specifying which ones.
  • Unlike the immunity from oversight the reference laboratory enjoys, given its affiliation with the Ministry of Higher Education, private labs are subject to the authority of the Health Ministry’s Central Department for Free Treatment. According to the same source, the department closed two of Speed Medical’s labs before the drive-through service was launched because they violated the Health Ministry’s decisions by conducting tests.The source says that Prime Speed took advantage of the contradiction between different ministerial policies. On the one hand, the Ministry of Higher Education has a laboratory that offers tests for a price without restrictions. On the other, the Health Ministry limits free testing to its hospitals and central laboratories and prohibits the private sector from conducting patient tests.
  • it violates the Constitution, which stipulates that the state is required to provide health services in the form of health insurance or otherwise to all citizens for all diseases without trying to make a profit
  • kept the operations of the reference laboratory — which is affiliated with the minister of higher education — immune from oversight by the health ministry.
  • She stressed that not recognizing her lab’s results is “arbitrary” and that the ministry “wants to expropriate the service.” She adds: “They’re fighting all labs and don’t allow anyone to do testing even though they’re unable to cover everyone who needs a test and refuse to test a lot of people.”
  • A source at the Health Ministry acknowledges that the state’s policies have contributed to creating a black market for testing. The ministry has been unable to compel private laboratories to offer testing at a specific price. “There were large hospitals that brought us samples and paid LE1,050 per sample, then sold them to patients for LE4,500 and 5,000,” the source says. “There were senior doctors who would strike deals with government hospitals, like the fever hospital and others, to send them samples to test at central laboratories for free, then turn around and charge patients large fees.” 
Ed Webb

Is Iran expanding its influence in Iraq? - 0 views

  • Well-known Iranian activist and journalist Roohollah Zam was captured Oct. 14 in Iraq and deported to Iran. The details surrounding his arrest and deportation have raised questions about the magnitude of Iran’s influence in Iraq. BBC Persian, Saudi-funded Alarabiya and many other Persian and Arabic media outlets reported that Zam had been captured by the Iraqi National Intelligence Service on an arriving flight from France at the Baghdad airport and immediately handed to Iranian agents, who sent him to Tehran the same day.
  • the Iraqi National Intelligence Service has been widely known for being independent from Tehran's influence in Iraq
  • Al-Monitor has learned from a senior adviser for the Iraqi National Security Council that Zam was actually arrested by Asa'ib Ahl al-Haq, a pro-Iranian Shiite military faction in the Popular Mobilization Units (PMU) and handed to the Iranians at the Baghdad airport. The source said the Iraqi National Security Council had been in contact with Asa'ib Ahl al-Haq and the Iranians about the arrest and had facilitated the operation for Asa'ib Ahl al-Haq. Zam, who has been critical of Iran in his journalistic works, was kept in the airplane until all the passengers had disembarked and then transferred to another airplane for transport to Tehran. It would appear that Persian and Arabic media were incorrect in attributing the Zam operation to the Iraqi National Intelligence Service instead of the Iraqi National Security Council.
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  • The Zam arrest indicates that Iranian influence now extends beyond the pro-Iranian militias and parliamentary blocs and has established a foothold in the security organizations of the Iraqi government. It also seems that there is a clear conflict between bodies in the Iraqi government that are pro-Iran and others seeking to remain independent of Iranian influence.
  • Anti-Iran slogans were prevalent at the latest protests.
  • Iraqi President Barham Salih has expressed support for the protesters and criticized the forces that have targeted demonstrators and that have arrested journalists and activists. Salih described these forces — which he did not specifically identify — as “enemies of Iraq” and outlaws. He said the Iraqi government has not ordered its forces to shoot protesters
  • Reuters has quoted anonymous Iraqi security officers supporting the position of Salih and Sistani that the snipers belong to a militia close to Iran, working under the PMU umbrella but acting separately from the Iraqi government. The PMU consists of a number of military factions, including pro-Iranian militias, that are supposed to be under the command of the prime minister.
  • All this suggests that Iranian influence has penetrated deep inside the Iraqi government, which is still confronting challenges in the institutions established under the US occupation, including the army and the Counter-Terrorism Service. The dismissal of popular Counter-Terrorism Service commander Abdel-Wahab al-Saadi was one of the factors that ignited the protests. It appears what are supposed to be independent Iraqi bodies are being targeted and weakened by and in favor of Iranian proxies behind the scenes.
Ed Webb

The Egyptian Republic of Retired Generals - By Zeinab Abul-Magd | The Middle East Channel - 0 views

  • Will any civilian winner be able to demilitarize the Egyptian state?
  • the discourse of presidential candidates avoids even acknowledging this situation, much less making a case for demilitarizing the state.
  • As Mubarak was grooming his son, Gamal, for presidency, he tried to ensure the loyalty of the military and stave off potential dissent by hiring military officers for economic and bureaucratic positions. The last 14 months, since the Supreme Council of Armed Forces (SCAF) assumed power following Mubarak's departure, has seen a rapid increase in the number of officers in the civilian positions.
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  • Sadat promulgated Law Number 47 of 1978 in order to end Nasser's legacy and reduce military presence in the cabinet, and Mubarak used the same law to bring them back
  • Pensions are typically low, the equivalent of monthly salaries without the extra allowances they enjoy while in service. These salaries are only somewhere between $400 and $500. In February 2011, five days after the end of the uprisings and the dissolution of Mubarak's parliament, the SCAF used their vague authority to amend this retirement law and introduce a 15 percent raise in pensions. But this is still not enough to cover increasing cost of living expenses in Egypt. Thus, the leadership offers officers civilian jobs with considerable salaries to supplement their unsatisfying pensions.
  • The head of the Supreme Constitutional Court now was originally an army officer who previously served as a judge in military courts. This judge, Faruq Sultan, also currently serves as the head of the Supreme Presidential Elections Commission. Ironically, retired officers even dominate in government bodies dedicated to oversight: The head of the Organization of Administrative Monitoring is a retired general and its offices across the nation are staffed with army personnel.
  • In order to keep a civilian face for the state in Cairo, only a few officers are hired as ministers, such as the minister of provincial development and the minister of information, running state-owned media. Outside the cabinet, they prefer certain spots where influence and wealth are concentrated. In the north and the south, 18 out of the 27 province governors are retired army generals. This includes key locations, such as touristic provinces in Upper Egypt, all the Suez Canal provinces, two Sinai provinces, sometimes Alexandria, and major Delta areas. Additionally, they serve as governors' chiefs-of-staff, directors of small towns, and heads of both wealthy and poor highly populated districts in Cairo.
  • In order to keep the hierarchical structure of the Egyptian military, the institution dismisses a significant number of officers at the ranks of Colonel and Brigadier General in their early 40s. It promotes only a small number into the ranks of Major General, Lieutenant General, and Chief of Staff, who in turn usually retire in their early 50s. The relatively young age at which officers leave service provides a perfect excuse for the military to place them at civilian jobs, lest they use their professional training in activities harmful to national security
  • There are three major military bodies engaged in civilian production: the Ministry of Military Production, running eight factories; the Arab Organization for Industrialization, running 12 factories; and the National Service Products Organization, running 15 factories, companies, and farms. They produce a wide variety of goods, including luxury jeeps, infant incubators, butane gas cylinders, plastic tubes, canned food, meat, chicken, and more. They also provide services, like domestic cleaning and gas station management. 
  • Civilians working under retired army personnel show continuous discontent about mismanagement, corruption, and injustice.
  • Labor strikes are primarily harming the military economic interests rather than the national economy.
  • "The military produces the best managers," Wuhiba said
  • Loyalty raises them into higher ranks within the army and then prestigious civilian positions afterward. Whereas under Nasser military managers adopted the socialist ideology, today they embrace neither socialist nor neo-liberal politics -- they are neutral. Their leaders in camps train them as young officers to maintain political neutrality and ensure that they uphold only one ideology: Egyptian nationalism. The majority are just individuals seeking to maximize their personal benefits later in life.
  • an elected president will certainly fail to demilitarize, and nothing will change.
Ed Webb

Egyptian intelligence services extend control over media | RSF - 0 views

  • Reporters Without Borders (RSF) is worried about the way Egyptian media outlets are being taken over by businessmen linked to the government and intelligence services. The regime’s domination of the media continues to grow and is even affecting pro-government media.
  • Al Hayat was quietly taken over at the end of August. The new owner’s identity has not yet been officially announced but several Egyptian media outlets have reported that it was acquired by Falcon, a successful Egyptian security company whose CEO is a former senior military intelligence officer and a former head of the radio and TV regulatory agency.
  • the financial pressure came shortly after Al Wafd’s representatives in parliament expressed their opposition to the government’s controversial plan to hand over two strategic islands, Tiran and Sanafir, to Saudi Arabia
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  • A former military intelligence officer, who was also an armed forces spokesman, took charge of Al Asema TV in January.
  • ONTV, a popular TV channel that supported the government while occasionally broadcasting critical comments, was taken over in May 2016 by Ahmed Abu Hashima, a powerful multi-millionaire steel magnate said to be close to military intelligence and to President Abdel- Fattah al-Sisi. A month after the acquisition, the authorities expelled Liliane Daoud, a well-known ONTV programme presenter with a reputation for journalistic integrity. She was deportable because she has British and Lebanese dual nationality.
  • Hashima bought two other TV channels, Al Nahar and CBC, and four newspapers, Sout Al Omma, Ain, Dot Masr and Al Youm al Sabea, in 2016.
  • the editor had told that that “President Sisi is the newspaper’s new owner” and that it could therefore not continue to employ critical journalists
  • the government’s influence over the broadcast media landscape was also significantly enhanced in 2016 by the creation of a DMC, a major new TV network with a range of news, sports and entertainment channels. Dubbed “the mouthpiece of the intelligence services” by some journalists and launched with a patriotic anthem and Koranic chants, DMC gets permission to film where other privately-owned TV channels are denied access. It is also known to broadcast interviews that are presented as exclusives but just reiterate the regime’s pro-security, anti-Muslim Brotherhood dogma
Ed Webb

What Killed Egyptian Democracy? | Boston Review - 0 views

  • The challenge Egyptians faced throughout the transition was to build an inclusive polity in the face of their deep divisions. They could resolve these divisions either by suppressing disagreements through a forceful exercise of state power or by competing at the ballot box. The former strategy requires massive state violence in the short term and almost always leads to suspension of formal democracy, without any guarantee of a return to democracy in the medium or long term. The latter strategy involves less force, establishes at least the formal elements of democratic rule, and preserves the possibility of additional democratic gains in the future, even if it requires concessions to undemocratic or illiberal political groups in the present and is marked occasionally by episodes of political violence.
  • The 14th century Arab Muslim political thinker Ibn Khaldūn’s tripartite typology of regimes—natural, rational, and Islamic—is consistent, in broad terms, with Rawls’s analysis. Natural states are based on relations of domination between the ruler and the ruled, restrained only by the limitations of the ruler’s actual power. Rational and Islamic states, by contrast, impose moral restraints on the exercise of political power. According to Ibn Khaldūn, rational and Islamic regimes transcend the relations of domination characteristic of natural regimes and establish overlapping conceptions of the common secular good. Ibn Khaldūn’s rational and Islamic regimes both can foster the convergence in political morality that—like Rawls’s overlapping consensus—characterizes a just constitution. Critically, this convergence or consensus must occur organically. Ibn Khaldūn argued that coerced adherence to Islamic law fails to produce virtuous subjects. Likewise, coerced imposition of even a just constitution cannot produce an effective system of justice if large numbers of citizens are incapable of freely adhering to its terms.
  • The 2012 constitution provided a more open political system than had prevailed prior to the Revolution. It increased formal political rights, reduced the power of the president, and increased the power of the prime minister and the Parliament. These changes were meaningful. For the first time, anyone could form a political party or publish in print without the prospect of government censorship. By contrast, during the Mubarak-era, the formation of political parties required the state’s approval, thereby ensuring that no party capable of challenging the ruling National Democratic Party could develop. Under the new constitution, the president would be limited to serving two terms, would face stricter rules on declaring states of emergency, and would no longer be able to dismiss the prime minister. Parliament was newly empowered to withdraw confidence from the government. And the president would be required to select the prime minister from the largest party in Parliament.
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  • Given that so many Egyptians disagree with the liberal position on these matters, it is hard to understand what the demand for a consensual constitution recognizing personal rights could have meant in practical terms.
  • The argument that the Constituent Assembly unreasonably exaggerated the strength of Islamist parties was plausible, but even granting this point, any democratic process would have placed a significant block of Islamists in the Constituent Assembly. So there was no democratic path for liberals to establish a constitution that secured the personal rights and freedoms they sought.
  • While one might disagree with Morsi’s methods, it is reasonable to conclude that he acted in accordance with his responsibilities as the only democratically accountable official in the country.
  • The real issue, however, was the make-up of the Constituent Assembly and the substance of the constitution it would draft. The parties arrived at a deal, including the semi-presidential structure of the state—with executive power shared by a prime minister and popularly elected president—but the role of religion was a sticking point. Because Parliament had selected the members of the Constituent Assembly, and because Islamists had won Parliament, Islamists dominated the Constituent Assembly. Liberals argued, not unreasonably, that those parliamentary elections exaggerated Islamists’ long-term political strength. Liberals also thought that the draft sacrificed or limited too many personal rights and freedoms in the name of religion, morality, and family values. They argued that the constitution would not be legitimate unless it was a consensual document capable of gaining acceptance by all significant social groups in Egypt.
  • Unlike constitutions of nearby states, such as Morocco, the 2012 constitution did not entrench any provisions, including those on the role of Islam, as supra-constitutional norms impervious to amendment. Nor did it place any substantive, ideological limitations on the formation of secular political parties, provided that they were not organized on a discriminatory basis. It did not impose religious piety or a theological test as condition for public office. This ensured that the constitution would not privilege the Muslim Brotherhood, other Islamist parties, or even the role of Islam itself above other provisions of the Constitution.
  • Many radical revolutionaries justified their support for Morsi’s removal not on the grounds that his actions represented an imminent threat to the political order, but rather on the grounds that Morsi did not confront the military and the police with sufficient vigor. In their eyes he thus betrayed the revolution. It is not clear, however, that Morsi had the power to transform these instruments of oppression in the year he was in office. The security forces were largely immune to Morsi’s influence. They refused to protect the offices of the Muslim Brotherhood and its political party, the Freedom and Justice Party. Even businesses affiliated, or thought to be affiliated, with the Muslim Brotherhood could not rely on police or military protection. When the presidential palace was attacked during demonstrations in the wake of Morsi’s constitutional decree, the security services were nowhere to be found. For Morsi’s opponents, however, his failure to reform the security services was taken not as a sign of his weakness but as evidence that he and the Muslim Brotherhood were conspiring with the military and police to destroy the liberal and radical opposition.
  • Even less plausible than fears of a secret alliance between the Muslim Brotherhood and the security services was Egyptian liberals’ belief that, in acting against Morsi, the military would promote democracy rather than restore the security state
  • Morsi could only be ousted by military intervention, a strategy that discredited political parties as the representatives of the Egyptian people in favor of the military, police, and other state institutions. Thus did Egypt’s most ardent democrats, under the banner of “the Revolution continues,” forego constitutional options in favor of methods that would only advance authoritarianism.
  • Liberal and radical critics of the Muslim Brotherhood failed to realize that the real choice in Egypt was not between an Islamic state and a civil state, but between a state based on some conception of the public good—religious or non-religious—and one based on pure domination.
  • Tragically, liberals underestimated the people’s desire for security and their willingness to submit even to arbitrary and predatory power in order to achieve it
Ed Webb

Debt is No Way For Non-Oil Arab States to Grow - Bloomberg - 0 views

  • many of the non-oil exporting nations in the Middle East and North Africa are undergoing a process of redefinition of how they are linked with the global economy. It is not going well.
  • Egypt, Tunisia, Morocco and Jordan are becoming more dependent on external borrowing than on foreign direct investments compared to the pre-2008 period. This is visible with declining ratios of FDIs to GDP, in contrast with increasing ratios of foreign debt to GDP and total exports
  • In Egypt, the ratio of external debt to GNI more than doubled from 17% in 2010 to 36% in 2017. The change was as pronounced in Tunisia, were the ratio jumped from 54% to 83%. In Morocco and Jordan, the ratios changed as well from 65% and 29.6%, to 47% and 75%.
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  • The ratio of external debt to total exports of goods, services and primary incomes was even more dramatic for all four countries. This is a proxy of the capacity of these economies to service their growing external obligations. Between 2010 and 2017, the ratio increased from 75%, 99.6%, 97.6% and 125% for Egypt, Tunisia, Morocco and Jordan re2spectively, to 190%, 178%, 125% and 198% in 2017. All the figures exceed the 77% limit that, in the World Bank’s reckoning, foreign debt has a negative impact on growth.
  • The relative political stabilization in all four countries as of 2014/2015 did not allow them much room for full-fledged recovery due to the global economic slowdown. This made it harder for all of them to achieve export-led growth and attract FDI, leaving them with foreign borrowing as the only viable option. Foreign debt accounts for much of the apparent recovery, as expressed in growth rates.
  • International capital markets are unstable and global trade is contracting. Governments should instead target local investment in brick-and-mortar sectors that can deliver real growth, create jobs and possibly reduce the dependency on some imports
  • better use of the net inflows of capital they have received for years in the form of remittances. Instead of channeling them into non-tradable sectors like real-estate, as has been often the case, they should be used to finance investment in more productive sectors
  • trade-oriented regional integration, opening markets in oil-rich countries. There might be room also for adding a regional dimension to plans for industrial diversification by Saudi Arabia and the United Arab Emirates, by coordinating flows of investment and technology and skill transfers in sectors like petrochemicals and hi-tech services.  Such measures would generate growth and employment for poorer allies and cement regional geopolitical arrangements
Ed Webb

Late Populism: State Distributional Regimes and Economic Conflict after the Arab Uprisi... - 0 views

  • This note will briefly outline the notion of an Arab “variety of capitalism” characterized by the central role of a distributive state whose interventions lead to a deep, and at least in parts unintended, segmentation of business and labour markets into insiders and outsiders. It will explain how this model has led to economic stagnation and contributed to the uprisings of 2011 as well as how it has hobbled economic adjustment after the uprisings, both under anciens and new regimes. Its pessimistic conclusion is that distributional institutions in most Arab countries remain very sticky, having created powerful vested interests not only in business but also in society at large that undermine the negotiation of a new “social contract” – a concept that many are talking about but no one seems to be able to map out in any detail.
  • Authoritarian-populist republics like Algeria, Egypt, (pre-war) Syria and Tunisia have achieved particularly good human development scores considering their modest levels of wealth (figure 3).
  • While Arab governments’ ambition to provide might have led to solid coverage of basic services, most Arab states have pledged much wider material guarantees to their citizens – typically beyond their fiscal and administrative capacity, especially once economic growth started stalling in the 1970s. The result has been a rigid insider-outsider division in which some benefit from Arab governments’ relative generosity while others remain excluded.
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  • The shares of public in total employment across core Arab countries in Maghreb and Mashreq mostly lie between 20 and 40 percent, far above those in richer Latin America, where they range from 4 to 15 percent (OECD 2014, 61), sub-Saharan Africa, where they range from 2 to 9 percent (Monga and Lin 2015, 138), or East Asia and Pacific, where they mostly lie below 5 percent (Packard and Van Nguyen 2014, 16).
  • A majority of citizens, however, remains excluded from state employment, which is often seen to be allocated in intransparent ways. As formal employment in the private sector remains miniscule, the default option for most remains the badly paid, precarious informal sector.
  • A large informal sector also exists in other developing countries. But different from most other developing economies, the “insider” group on the labor market mostly consists of public employees (figure 5). This setup makes for a relatively large and protected insider group, but also crowds out state resources for more inclusive and growth-oriented policies.
  • Insider-outsider dynamics are also at play in Arab business, the top tiers of which are typically state-dependent cronies, protected through layers of heavy regulation as well as discretionary subsidies and credit allocation – themselves often distorted legacies of earlier periods of statist development
  • On labor markets, informality typically lasts longer, labor turnover is lower, and exits from public employment are almost unheard of
  • deep formal and informal state intervention and protection result in low mobility between segments
  • The only universal benefit on which most Arab states spend large amounts are energy subsidies, which are regressive as they disproportionately benefit richer households.
  • While Arab states have gone to great lengths to provide, popular expectations of provision in the region have also been particularly high (figure 6) – arguably a legacy of populist policies that have promised universal public services and employment to the masses since the age of Nasser.
  • Given these high expectations, material exclusion and inequality and the highly visible “winner takes all” business cronyism in the 2000s has been grating for many ordinary citizens – even if average levels of inequality in the region remain on a middling level in global comparison
  • While the elites leading the revolutions cared deeply about questions of political freedom, it is clear that material issues played an important role in the mass mobilization that tipped the balance in cases like Egypt or Tunisia.
  • Since 2011, some energy subsidies have been cut in a piecemeal fashion, but only under enormous fiscal pressure and without building a comprehensive social safety system to compensate. In the absence of such systems, public resistance to subsidy reforms has been strong. No ruler has yet dared to substantially change public employment policies.
  • This anti-development equilibrium of low capacity and vested interests has led Arab states even further down the route of unequal and exclusive distribution after 2011. In Tunisia, the most powerful interest group is the national union UGTT, which represents mostly middle aged, middle class government employees – not the informal sector whose rage fuelled the revolution. The UGGT has contributed to elite-level political pacts that have prevented Tunisia from backsliding into autocracy. In the economic field, however, it has mostly focused on defending insider privileges, investing much of its energy in fighting successfully for fiscally unsustainable civil service salary raises. In the meantime, little has been done for improving the lot of informal workers. They themselves remain fixated on the public sector: protesters from marginalized communities have been asking for the provision of one government job per family, and unrest has been triggered by the removal of individuals from an official list promising government employment.
  • Even “fierce” states embroiled in civil wars have deepened their old-style distributional commitments: Post-Saddam patronage policies under rival prime ministers have resulted in a state that now reportedly employs 7 million individuals, about half the total adult population (More than 55 percent of the population of about 36 million is under 20). Including in ISIS-occupied areas, 8 million individuals rely on a government salary or pension. Iraq competes with much richer GCC countries for the highest share of government employees anywhere in the world
  • Tunisian and Egyptian attempts to prosecute old regime cronies have been half-hearted at best and many cronies remain well connected to the new ruling elites. In the absence of an independent business class, both governments have made attempts to lure temporarily marginalized old-school business tycoons back into their countries to invest.
Ed Webb

The Coronavirus Oil Shock Is Just Getting Started - 0 views

  • People in the West tend to think about oil shocks from the perspective of the consumer. They notice when prices go up. The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness, as price controls left Americans lining up for gas and European governments imposed weekend driving bans. This was more than an economic shock. The balance of power in the world economy seemed to be shifting from the developed to the developing world.
  • If a surge in fossil fuel prices rearranges the world economy, the effect also operates in reverse. For the vast majority of countries in the world, the decline in oil prices is a boon. Among emerging markets, Indonesia, Philippines, India, Argentina, Turkey, and South Africa all benefit, as imported fuel is a big part of their import bill. Cheaper energy will cushion the pain of the COVID-19 recession. But at the same time, and by the same token, plunging oil prices deliver a concentrated and devastating shock to the producers. By comparison with the diffuse benefit enjoyed by consumers, the producers suffer immediate immiseration.
  • In inflation-adjusted terms, oil prices are similar to those last seen in the 1950s, when the Persian Gulf states were little more than clients of the oil majors, the United States and the British Empire
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  • In February, even before the coronavirus hit, the International Monetary Fund was warning Saudi Arabia and the United Arab Emirates that by 2034 they would be net debtors to the rest of the world. That prediction was based on a 2020 price of $55 per barrel. At a price of $30, that timeline will shorten. And even in the Gulf there are weak links. Bahrain avoids financial crisis only through the financial patronage of Saudi Arabia. Oman is in even worse shape. Its government debt is so heavily discounted that it may soon slip into the distressed debt category
  • The economic profile of the Gulf states is not, however, typical of most oil-producing states. Most have a much lower ratio of oil reserves to population. Many large oil exporters have large and rapidly growing populations that are hungry for consumption, social spending, subsidies, and investment
  • Fiscal crises caused by falling prices limit governments’ room for domestic maneuver and force painful political choices
  • Ecuador is the second Latin American country after Argentina to enter technical default this year.
  • Populous middle-income countries that depend critically on oil are uniquely vulnerable. Iran is a special case because of the punitive sanctions regime imposed by the United States. But its neighbor Iraq, with a population of 38 million and a government budget that is 90 percent dependent on oil, will struggle to keep civil servants paid.
  • Algeria—with a population of 44 million and an official unemployment rate of 15 percent—depends on oil and gas imports for 85 percent of its foreign exchange revenue
  • The oil and gas boom of the early 2000s provided the financial foundation for the subsequent pacification of Algerian society under National Liberation Front President Abdelaziz Bouteflika. Algeria’s giant military, the basic pillar of the regime, was the chief beneficiaries of this largesse, along with its Russian arms suppliers. The country’s foreign currency reserves peaked at $200 billion in 2012. Spending this windfall on assistance programs and subsidies allowed Bouteflika’s government to survive the initial wave of protests during the Arab Spring. But with oil prices trending down, this was not a sustainable long-run course. By 2018 the government’s oil stabilization fund, which once held reserves worth more than one-third of GDP, had been depleted. Given Algeria’s yawning trade deficit, the IMF expects reserves to fall below $13 billion in 2021. A strict COVID-19 lockdown is containing popular protest for now, but given that the fragile government in Algiers is now bracing for budget cuts of 30 percent, do not expect that calm to last.
  • Before last month’s price collapse, Angola was already spending between one fifth and one third of its export revenues on debt service. That burden is now bound to increase significantly. Ten-year Angolan bonds were this week trading at 44 cents on the dollar. Having been downgraded to a lowly CCC+, it is now widely considered to be at imminent risk of default. Because servicing its debts requires a share of public spending six times larger than that which Angola spends on the health of its citizens, the case for doing so in the face of the COVID-19 crisis is unarguable.
  • Faced with the price collapse of 2020, Finance Minister Zainab Ahmed has declared that Nigeria is now in “crisis.” In March, the rating agency Standard & Poor’s lowered Nigeria’s sovereign debt rating to B-. This will raise the cost of borrowing and slow economic growth in a country in which more than 86 million people, 47 percent of the population, live in extreme poverty—the largest number in the world. Furthermore, with 65 percent of government revenues devoted to servicing existing debt, the government may have to resort to printing money to pay civil servants, further spurring an already high inflation rate caused by food supply shortages
  • The price surge of the 1970s and the nationalization of the Middle East oil industry announced the definitive end of the imperial era. The 1980s saw the creation of a market-based global energy economy. The early 2000s seemed to open the door on a new age of state capitalism, in which China was the main driver of demand and titans like Saudi Aramco and Rosneft managed supply
  • The giants such as Saudi Arabia and Russia will exploit their muscle to survive the crisis. But the same cannot so easily be said for the weaker producers. For states such as Iraq, Algeria, and Angola, the threat is nothing short of existential.
  • Beijing has so far shown little interest in exploiting the crisis for debt-book diplomacy. It has signaled its willingness to cooperate with the other members of the G-20 in supporting a debt moratorium.
  • In a century that will be marked by climate change, how useful is it to restore profits and prosperity based on fossil fuel extraction?
  • The shock of the coronavirus is offering a glimpse of the future and it is harsh. The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can’t be resolved by states propping up their uncompetitive oil sectors. Even more important is the need to diversify the economies of the truly vulnerable producers in the Middle East, North Africa, sub-Saharan Africa, and Latin America.
Ed Webb

Climate migration in Iraq's south brings cities to crisis - The Washington Post - 0 views

  • Iraq as the fifth-most-vulnerable country to climate change. Temperatures have increased by 1.8 degrees Celsius (3.2 degrees Fahrenheit) in three decades, according to Berkeley Earth, well above the global average, and in the summers, the mercury now regularly hits 50 Celsius (122 Fahrenheit)
  • burning crops and desiccating marshes
  • As upstream dams in Turkey and Iran weaken the flows of the Tigris and Euphrates rivers, a salty tide is creeping north from the Persian Gulf, poisoning the land
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  • changing climate is forcing families to sell off their livestock and pack up for urban centers such as the region’s largest city, Basra, in search of jobs and better services
  • As hotter, more-crowded cities become the future of a warming world, a lack of preparedness will only exacerbate the discontent already fraying the social fabric
  • decades of U.S.-backed sanctions and war, combined with the weight of corruption and neglect, have left Basra’s infrastructure unable to adequately support the 2 million people the city already houses — let alone the rising tide of newcomers.
  • According to official figures, Basra province has a population of over 3 million — an increase of at least 20 percent in 10 years. And most of that growth has been in its urban areas
  • nearly 40 percent of farmers across the country reported an almost total loss of their wheat crop.
  • Social media has been awash with photos showing water buffaloes lying dead on the cracked mudflats of southern Iraq’s dried-out marshlands
  • 12 percent of residents were newcomers who had settled in Basra over the past decade, mostly because of water scarcity and a lack of economic opportunities. The number is even higher in other southern Iraqi cities, such as Shatrah and Amarah.
  • water degradation in the province cost Iraq $400 million in lost animals, palm trees and crops in 2018 alone
  • As he saw it, migration was only making the situation worse, and he felt that the slow tide of arrivals was changing his city. “Their mind-set is different; we don’t know how to deal with them,” he said. “They don’t respect the laws here.”
  • Decades of government neglect in rural areas, particularly in the education sector, have left many of the migrants illiterate.
  • often struggle to access the city’s formal labor market and instead rely on temporary employment as construction workers or truck drivers, or hawking goods from carts in the street. And their habits and attitudes clash with those of their urban cousins.
  • political leaders in southern Iraq have started blaming the city’s crime rate — as well as other problems — on its migrants.
  • A few years ago, huge demonstrations decrying corruption and unemployment were crushed with deadly force. Since then, every summer has brought scattered daily protests over authorities’ failure to provide basic services.
  • “This is how you drive these people into criminality, by discriminating,” she said. “They move to irregular neighborhoods where there’s no proper public services and no employment. And then social issues will emerge.”
  • When a heat wave forced the shutdown of Basra’s power grid in August, the homes of newcomers and longtime residents alike were plunged into darkness as millions spent sleepless nights drenched in sweat
  • “My dreams in this country are being lived by a dog in Europe,”
Ed Webb

Torture and Tunisia: Survivors accuse persecutors on live TV | Middle East Eye - 0 views

  • the Truth and Dignity Authority (Instance Vérité et Dignié or IVD), a body created at the end of 2013 to highlight abuses suffered by thousands of people, mostly before the 2011 revolution that toppled long-term president Zine El Abidine Ben Ali
  • More than 62,000 people and communities have filed cases with the IVD, a figure that includes those claiming to be victims as well as repentant perpetrators.
  • The alleged incident must have taken place between 1 July 1955, when Tunisia became independent, and 31 December 2013, when the country's new Transitional Justice Law came into force. The accused perpetrator must be the state or persons acting on its behalf or under its protection. Finally, crimes should be considered serious or systematic.
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  • 13,752 complaints of arbitrary arrest have been filed, as well as 6,367 allegations of unfair trials
  • mapping has highlighted the appearance of the so-called "roast chicken" torture method since the 1960s, and has proved that sexual violence was almost systematic in the Cap Bon region at the north-eastern tip of Tunisia
  • “We are not targeting the executioner, but the executives. Those people are sometimes dead, retired or still in office."
  • no one has confessed to the most serious crimes, which would lead to a special trial
  • "There is a huge disagreement between the state and the IVD," Boughattas told MEE - he highlighted the economic reconciliation bill wanted by President Beji Caid Essebsi, which would mean that corruption cases aren't heard by the IVD in the first place.
  • The IVD says it is still in the process of setting up a consultation service to deal with compensation claims.Its leadership says it wants to set up a consultation service to "use reparations according to a development approach". The objective will be to ensure that money that is given back is used not as a compensation fund but as a sustainable resource.
Ed Webb

ANALYSIS: Egypt's military-economic empire - 0 views

  • The roots of the military’s commercial empire go back to the 1980s, when a combination of a peace dividend after Egypt’s 1979 peace treaty with Israel and a fiscal crisis led the country to pare back its defence budget. Defence spending as a proportion of GDP fell from 6.5 percent in 1988 to 1.8 percent in 2012, according to World Bank indicators. The armed forces had to find new sources of revenue.
  • forced labour, in the form of conscripts, is almost certainly used in army-run factories. Quite apart from the ethical ramifications of this, it allows the military to undercut its competitors, since conscripts don’t have to be paid full wages
  • Businesses controlled by the military are widely dispersed. Some may come under a number of umbrella organisations, including the Arab Organisation for Industrialisation, the National Services Projects Organisation (NSPO) and the Ministry of Military Production. In addition, the EAF holds majority or minority stakes in many other semi-public or private companies, especially in the fields of infrastructure and subcontracting. EAF influence also extends to “sensitive” but nominally civilian infrastructure. Senior positions at a number of airports have for some years been reserved for retired army officers, as a sort of unofficial “pension programme.”
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  • the EAF is able, through the use of land designations and other means, to control much of the public lands (desert, agricultural and urban) that comprise 94 percent of Egypt’s area, through the use of land designations, the ability to auction such lands and to receive compensation from the state treasury when military zones are rezoned to civilian purposes. The army also controls the coastline (officially classed as border territory) and is thus able to profit from tourist developments. As such, the EAF wields enormous influence over the real estate market and the country’s development structure
  • Estimates as to how much of the total economy is controlled by the EAF range from 40 percent, according to telecoms billionaire Naguib Sawiris (in comments to local media last March) to somewhere between 45 percent and 60 percent, according to Transparency International
  • the consensus among those asked by Middle East Eye as to the size of the military-economic complex is that the EAF’s reach extends into virtually every economic sector, from foodstuffs like tomato paste and olive oil, to consumer electronics to real estate, construction, transport and services
  • since the military’s budget - and by extension, its economic fiefdom – is kept secret, EAF-controlled businesses can benefit from subsidies that are kept off the books, as well as having more freedom of manoeuvre amid the lack of oversight.  One example was the decision under the Supreme Council of the Armed Forces to slash fuel subsidies for industrialists. Since the military’s budget (and therefore, its energy costs) are off the books, the rising energy prices disproportionately affected EAF competitors, but not the forces themselves
  • military involvement in the political economy generally leads to worse performance. Within the region, the examples of Iran and Algeria point to this, while China has taken steps to reduce its armed forces’ commercial exposure over the past few years precisely for this reason
  • A further effect of the EAF’s economic dominance is a lack of growth opportunities for SMEs, since only favoured insiders can win lucrative contracts and deal with the permit system. In turn, this leads to a large informal economy of insiders, leaving many Egyptians outside, in poverty
  • While patronage is nothing new in Egyptian politics, since President Abdel Fattah el-Sisi came to power the top brass has expanded intra-military patronage to the extent that they are crowding out other economic actors and failing to bring in key constituencies such as opposition groups, the private sector bourgeoisie and the urban poor. The EAF has expanded its reach so fast that now it has to defend its empire against these groups, sowing seeds of further strife in future.
Ed Webb

In Translation: Egyptian minister, the worst job in the world - The Arabist - 0 views

  • For weeks, the Egyptian press has reported that prospective ministers are turning down offers to join the cabinet led by Prime Minister Ismail Sherif
  • under Sisi, most if not all key decisions are made in the presidency. A kind of shadow government run by intelligence officers holds the real files. And the president – as seen in the long-postponed decision to devalue the currency – waits until the very last moment to make vital decisions, wasting time, public confidence and opportunity in the process
  • The various lobbies (big business, civil society groups, political parties etc.) that would normally influence policy under the Mubarak era have no way in. Decisions are made in mysterious ways. Ministers have little leeway to implement their own vision and see no coherent plan coming from the top
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  • things are changing fast and people are fed up
  • A person who refuses to play the role of extra at the ministerial level — not knowing why they brought him to the ministry or for what reasons they would remove him — is a person who deserves to be praised in comparison with a person who accepts a ministerial role while knowing that many high-level posts in his ministry and its agencies have been transformed into end-of-service benefits, which some obtain after the end of their term of service, compulsory by law, without any consideration for standards of competence and training
  • the insistence on carrying out cabinet reshuffles without any serious attempt to review the overarching policies and decisions that have led the country into economic and social catastrophe — indeed, the current policies — will not yield anything positive
  • In theory, the new constitution gives the parties and blocs in parliament the highest word in forming the government; however, we see them waiting for whatever ingenious cabinet lineup the executive authority is so kind as to bestow upon them, just to rubber stamp it even before the lawmakers know all the names of the new ministers
Ed Webb

Two security service giants in running for presidency of new party | Mada Masr - 0 views

  • Former head of General Intelligence Murad Muwafy and former Interior Minister Ahmed Gamal Eddin are being considered by the leadership of the Masr Belady front as it prepares to establish a political party. The front has a number of figures from cabinets during the administration of former President Hosni Mubarak. Mubarak's last prime minister, Ahmed Shafiq, was also considering joining the front, according to a December report in Al-Watan
  • old-regime figures such as former head of the Central Authority for Organization, Safwat Nahhas, former Planning Minister Fayza Aboul Naga, former investment chief Mostafa Fiqqi, and former Grand Mufti Ali Gomaa as current members of Masr Belady
  • a number of old regime figures establish parties and movements, many of whose prominent members are shared between groups
  •  
    Behold the Feloul Party
Ed Webb

Strongmen Die, but Authoritarianism Is Forever - Foreign Policy - 0 views

  • Erdogan and his party have irrevocably altered Turkey; there is no going back.
  • Turkey’s political trajectory is an exemplary case of a country permanently rolling back democratizing reforms, but it’s not the only one. Hungary’s Viktor Orban and Jaroslaw Kaczynski’s Law and Justice party in Poland are undermining the rule of law, democratic values, and human rights in the service of what they define as authenticity and security. These are developments that predate the migrant crisis that is buffeting Europe, though the large number of people from Africa and the Middle East seeking refuge in the European Union has made Orban’s and Kaczynski’s message more politically potent, and thus the undoing of democratic institutions and liberal values politically acceptable, for large numbers of Hungarians and Poles.
  • what’s important is how, in response to opposition, leaders in Turkey, Hungary, and Poland have established new institutions, manipulated existing ones, and hollowed out others to confront political challenges or to close off their possibility
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  • One of the best examples of institutional manipulation is the way in which Turkey’s AKP used its majority in the Grand National Assembly to whitewash a 2014 parliamentary investigation into corruption charges against four government ministers that threatened to ensnare Erdogan and his family. The process rendered the idea of parliamentary oversight essentially meaningless and gave the Turkish leader an opportunity to argue — credibly for his constituents — that the original allegations were an attempted coup. Since the corruption allegation, Erdogan has manipulated institutions to reverse the outcome of an election he did not like in 2015, tried his opponents in courts packed with his supporters, and debased Turkey’s electoral laws to ensure the passage of a referendum on constitutional amendments that would grant the presidency extraordinary powers
  • attacks on the press, along with the transformation of the state-owned broadcaster and state-run news service into an arm of the AKP, have crowded out independent newsgathering
  • the state-owned Anadolu Agency called the presidential election for Erdogan well before the Supreme Electoral Council — made up of AKP appointees — could count the vast majority of ballot boxes. This prompted Erdogan to appear on television graciously accepting another presidential term, making it impossible for the election board to contradict Anadolu’s projection and thus rendering the board a mere prop in AKP’s electoral theater
  • institutions tend to be sticky — they remain long after the moment when they are needed, often leveraged by a new cohort of politicians to advance their agendas. This does not imply that institutional change is impossible. It is just that revisions take place in the context of existing institutions and previous innovations
  • authoritarianism tends to build on itself. It may eventually give out, but short of a revolution that undermines a mutually reinforcing political and social order, institutions will have a lasting impact on society
Ed Webb

Algeria's army moves from arbiter to central player in politics - 0 views

  • The popular revolt that began Feb. 22 is forcing the armed forces to confront their contradictory role as both a key participant and arbiter of government.
  • In 1965, Col. Houari Boumedienne, the army chief, captured the presidency for himself following a military coup. Since then, directly or indirectly, the army has been making and unmaking nominally civilian governments while guiding the country’s political life.
  • With Bouteflika’s regime crumbling, the army found itself back in the spotlight. Under pressure from the street, Gaid Salah pushed the president to step down and obtained the resignation sought by so many Algerians on April 2. Since then, the general has been the public figure who speaks for the government and seeks to set its course. However, Gaid Salah remains wedded to a political transition as contemplated under the constitution, which calls for elections within 90 days (they have been scheduled for July 4). The popular protest movement, however, rejects this approach, insisting that the old guard cannot be trusted to honestly organize the passage to a new regime in which the people rule.
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  • Gaid Salah addresses the nation on Tuesdays; the public answers on Fridays with massive street protests
  • intelligence services that used to answer to the president are now under the general staff’s thumb. Gaid Salah has put trusted men in charge, so-called “administrative generals” with no experience serving this black box of the Algerian system.
  • questions about the power of the intelligence services’ supposed influence networks
  • When Gaid Salah invokes Article 102 of the Algerian Constitution, which charts the path for a political transition, the street answers with references to Article 7, which invokes the sovereignty of the people. This is the chasm the army must now try to bridge in its face to face with Algerians. It will require a true cultural revolution on the part of army leaders to accompany the democratic revolution of the Algerian people.
Ed Webb

Under Sisi, firms owned by Egypt's military have flourished - 0 views

  • Maadi is one of dozens of military-owned companies that have flourished since Abdel Fattah al-Sisi, a former armed forces chief, became president in 2014, a year after leading the military in ousting Islamist President Mohamed Mursi.
  • In interviews conducted over the course of a year, the chairmen of nine military-owned firms described how their businesses are expanding and discussed their plans for future growth. Figures from the Ministry of Military Production - one of three main bodies that oversee military firms - show that revenues at its firms are rising sharply. The ministry’s figures and the chairmen’s accounts give rare insight into the way the military is growing in economic influence.
  • Some Egyptian businessmen and foreign investors say they are unsettled by the military’s push into civilian activities and complain about tax and other advantages granted to military-owned firms
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  • In 2016, the military and other security institutions were given exemptions in a new value-added tax (VAT) law enacted as part of IMF-inspired reforms. The law states that the military does not have to pay VAT on goods, equipment, machinery, services and raw materials needed for the purposes of armament, defense and national security.The Ministry of Defense has the right to decide which goods and services qualify. Civilian businessmen complain that this can leave the system open to abuse. Receipts for a cup of coffee at private sector hotels, for example, add 14 percent VAT. Receipts at military hotels do not. Employees at the military-owned Al-Masah Hotel in Cairo told Reuters that no VAT was charged when renting venues for weddings and conferences.
  • The Ministry of Military Production is projecting that operating revenues from its 20 firms will reach 15 billion Egyptian pounds in 2018/2019, five times higher than in 2013/2014, according to a ministry chart. The ministry does not disclose what happens to the revenues. The chairmen of two of the firms said profits go to the ministry or are reinvested in the business.
  • “I don’t want to be a local shop. I want to be a company that has the capacity to export and compete internationally.”
  • The chairmen of two military engineering companies, Abu Zaabal Engineering Industries Co and Helwan Engineering Industries Co, said in recent years it had become much easier to access financing through the Ministry of Military Production.
  • Among projects the Ministry of Military Production announced in 2017 was a plan to plant 20 million palm trees with an Emirati company and build a factory to make sugar from their dates. It agreed with a Saudi company to jointly manufacture elevators. The military inaugurated the Middle East’s biggest fish farm on the Nile Delta east of Alexandria.
  • The Ministry of Military Production signed a memorandum of understanding with China’s GCL Group last week to build a solar panel factory worth up to $2 billion. The military has taken over much of the construction of intercity roads from the Ministry of Transport and now controls the toll stations along most major highways.
  • Economists and investors say reforms tied to a $12 billion three-year IMF program signed in Nov. 2016 should lay the ground for economic expansion. But foreign investors are still shying away from Egypt, apart from those focusing on the more resilient energy sector. Non-oil foreign direct investment fell to about $3 billion in 2017 from $4.7 billion in 2016, according to Reuters calculations based on central bank statistics.  
  • foreign investors were reluctant to invest in sectors where the military is expanding or in one they might enter, worried that competing against the military with its special privileges could expose their investment to risk. If an investor had a business dispute with the military, the commercial officer said, there was no point in taking it to arbitration. “You just leave the country,” he said.
  • Egypt’s military, the biggest in the Arab world, has advantages.It enjoys financial support from Saudi Arabia and the United Arab Emirates, staunch supporters of Sisi since he toppled the group they see as a threat to the Middle East, the Muslim Brotherhood. Western powers see Cairo as a bulwark against Islamist militancy. Egypt receives $1.3 billion in military aid annually from the United States alone.
  • In 2015, the defense minister issued a decree exempting nearly 600 hotels, resorts and other properties owned by the military from real estate taxes
  • Military companies receive an exemption from import tariffs under a 1986 law and from income taxes under a 2005 law. Cargoes sent to military companies do not have to be inspected.
  • At bustling Cairo squares, people line up to buy subsidized meat and other food handed out from trucks sponsored by the military. Sisi said he had instructed the military to enter the market “to supply more chicken to push down prices.”Some disagree with such measures on the grounds the military’s mission is to protect the country from external threats.“We have reached a point where they are competing even with street vendors,”
Ed Webb

Hosni Mubarak's risk-averse reign brought Egypt to calamity - 0 views

  • In May 2010, despite American blandishments, Mubarak renewed the state of emergency that he’d ruled under ever since the assassination of his predecessor, Anwar Sadat. His ruling party rigged elections for the upper house of parliament while shutting down attempts by domestic civic groups to monitor the vote. In June, Egyptian security services dragged a young man, Khaled Said, out of an internet cafe in Alexandria and beat him to death on the street. His murder became a cause célèbre for young Egyptians, sparking a Facebook page called “We Are All Khaled Said” that turned into a locus for organizing what became the 2011 Egyptian uprising.
  • The ruling party took 473 of 508 elected seats, while the opposition presence went from over 100 seats to 31. At a meeting the following month, when an Egyptian visitor described the humiliating spectacle of the sham elections and the rising anger among Egyptians in response, Secretary Clinton listened and then noted that Mubarak was creating exactly the situation he was most concerned about. The protests began about six weeks later, and 18 days after that, Mubarak had resigned.
  • Looking back from today’s brutally repressive Egyptian regime led by President Abdel Fatah el-Sisi, the ousted Mubarak’s 30-year reign seems gentler and sepia-tinged with unrealized possibility.
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  • Mubarak experimented with limited political openings in media and civil society and limited competition from other political parties (although his regime also used dirty tricks, court cases, and other tools to constrain the outcomes)
  • grand gestures were never Mubarak’s bag. As he grew older and dithered regarding his own intentions for leadership succession, his sons grew ambitious, his ruling party cronies grew rapacious, his security services grew arrogant, his generals grew anxious, and his citizens lost patience. Egyptians will be living with the consequences of Mubarak’s choices for many years after his death.
Ed Webb

AGSIW | Oman's New Sultan Unlikely to Pursue Qaboos' Monopoly of Power - 0 views

  • Qaboos wielded an exceptional degree of autonomy and authority within the Omani power structure, grounded in his historic role as the unifier and builder of the modern Omani state. It is doubtful that the new sultan, Haitham bin Tariq al-Said, will be able to monopolize power to the same degree, especially given Oman’s economic challenges, which will require buy-in and collaboration to be met successfully
  • In the rest of the Gulf monarchies, the establishment of the modern bureaucratic state was accompanied by the formation of dynastic rule, as members of the ruling house were integrated into the governing structure as ministers holding key portfolios. This power sharing didn’t happen in Oman, or not to the same extent. At the time of his passing, Qaboos not only ruled, but ran the government as prime minister, maintaining almost all of the sovereign portfolios – defense minister, foreign minister, and supreme commander of the armed forces – while also holding the reins of the economy as finance minister and head of the board of governors of the central bank. The main theorist of dynastic monarchy, Michael Herb, has stated: “While the Al Saud rule Saudi Arabia, and the Al Sabah Kuwait, Qabus rules Oman.”
  • It is particularly noteworthy that the ruling family council declined to exercise its constitutional power to select the next ruler, instead deferring to the will of Qaboos as expressed in a letter opened before the public. This implies that the new sultan is not indebted to his family for his position
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  • Unlike Qaboos, who was childless and without a male sibling, Haitham has close male relatives. These include two half-brothers, Assad and Shihab bin Tariq, both once viewed as potential successors to Qaboos. Assad’s eldest son, Taimur, has been touted as a leading figure in the next generation of royals. And Haitham himself has two sons: The eldest, Theyazin – who studied at Oxford, joined the Ministry of Foreign Affairs in 2013, and has served at the Omani Embassy in London since 2018 – has returned to Muscat and has been attending key diplomatic functions since his father’s assumption.
  • In other Gulf ruling families, competition among family members has fueled the expansion of royal control over government, as family demands are accommodated through government sinecures. Even if this competitive dynamic does not take hold in Oman, the royal presence may be felt in other ways. In recent years members of the Al Said family, including the new sultan and his siblings, have been increasing their involvement in business. How this is managed – or not – will affect the critical issue of Oman’s economic growth.
  • Qaboos incorporated many minorities into the ruling structures, within a strong narrative of interfaith and interethnic tolerance. Yet one clearly favored group emerged from within the leadership: Oman’s merchant families.
  • political reliance on merchants offered both advantages and risks. Bringing in this class offered a powerful constituency in support of the government and its extensive national development ambitions. But in times of economic downturn, it also left the government susceptible to accusations of conflicts of interests and self-dealing. This is indeed what played out in 2011 as protesters based in the industrial port of Sohar demanded reform of the government with complaints centered on corruption
  • He nearly doubled the private sector minimum wage and created 50,000 new government jobs, mostly in the security services. He also further developed Oman’s participatory institutions through the establishment of elected municipal councils and granting more powers to the elected Shura Council. A number of the most publicly criticized ministers were removed from office amid a broader campaign of corruption prosecutions that resulted in convictions of some government officials and businessmen over the next few years.
  • In 2019, the Omani deficit rose to $50 billion contributing to a steep rise in public debt from below 5% of gross domestic product to nearly 50% in just four years. This limits the new sultan’s ability to curry more favor through a repetition of government spending and populist solutions. There is a desperate need to create more jobs for young Omanis. But there is also the need to create conditions favorable to business to attract Omani capital back into the country
  • Oman has created a means of formal public input through elections for municipal councils and the lower house of Parliament, the Shura Council. While the role of the municipal councils is advisory, the Shura Council can propose and amend legislation drafted by the Council of Ministers and interpolate service ministers regarding violations of the law; this privilege does not extend to the ministers of defense and foreign affairs
  • these institutions have not demonstrated the ability to impose meaningful accountability
  • voting participation has been uneven and declining since the very high turnout of 76% in 2011
  • the status quo – especially regarding the economy – is not sustainable and will press the new leadership to make immediate changes
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