Wednesday, February 16, 2011

what motivates the egyptian military

via dagger aleph on FB, i read this piece by jonathan wright busting the myths about the egyptian military. the first one it busts:
the myth that the Egyptian military controls up to 40 percent, even 45 percent, of the economy (Augustus Richard Norton cited the 40 percebt figure in an article which I can no longer trace and Josh Stacher does not rule out 45 percent). If this was ever true, which I doubt, it ceased to be true many years ago. The balance between the private and public sectors of the Egyptian economy has been shifting inexorably in favour of the private sector since the mid-1970s, and the military plays no significant role in the sectors which are now dominant -- cement, steel, oil, gas, tourism, telecommunications, banking and petrochemicals. Two often-cited examples of the military role in the economy are its ownership of mineral water bottling plants and the production of washing machines in what used to be arms factories. Both of these enterprises came about under special circumstances. The mineral water operation is in the remote oasis of Siwa, close to the Libyan border, and began at a time when that area was under military control for strategic security reasons. The washing machine operation began in the 1970s when the Arab Organisation for Industrialization (AOI) collapsed and the Egyptian government needed to find ways to use excess capacity in the arms factories. The AOI was a joint Arab project for military production but the Arab partners pulled out when Egypt signed a peace treaty with Israel in 1979. Both these sectors are highly competitive and the army's market share (where it exists - I've never seen these washing machines in the market) is small.
it's a response to the point made by the planet money podcast that i touted last week. though i suppose it doesn't directly contradict what PM said. they did not go with a 40% or 45% figure, but rather noted that estimates vary widely between 5 and 40%. even if it were only 5 to 15% that still is a really significant portion of the egyptian economy. but more importantly (in terms of using that fact to analyze what the military might do next), even if wright is correct it could still be true that a large portion of the military's funding still might be from its businesses. that would still support PM's ultimate point, which is that the military has skin in the game. its economic interests give the egyptian military an incentive to keep up stability but not necessarily democracy. or at least the incentive for democracy only exists to the extent that is the only way that the military thinks it will have stability.

put another way: to the extent wright's myth-busting is a criticism of the PM point* he has it backwards. the egyptian military would not have to control a very large portion of the egyptian economy for that fact to influence the military's behavior. what would influence the military's behavior is the extent to which its funding comes from its investments in the egyptian economy. whether the egyptian military controls 5%, 20%, 40% or 45% of egyptian businesses is not as important as how big a percentage the military's investments are of its own budget.

in any case, we're all just reading tea leaves, right? the six months that the egyptian military says it will remain in control to organize elections is a long time. they're in a position to have enormous influence over what the new egypt ultimately looks like. and so we have optimists and pessimists trying to predict what the military will do when really no one knows for sure. the pessimists point to the military's ban on labor unions and strikes as a sign it is moving in an anti-democratic direction, whereas the optimists point to the fact that the military has appointed a broad based panel of respected jurists to revise the constitution as a sign that they are serious about real democratic reform.

* i'm calling it the "PM point" just as a shorthand even though planet money is hardly the only one making it.