Al-Sisi Is Stuck Between A Rock And A Hard Place: Carnegie

Abdel Fattah al-Sisi is stuck between a rock and a hard place. Carnegie said in a paper titled: “Egypt’s Regime Faces an Authoritarian Catch 22”.

The paper stated that Egypt’s economic crisis which is the harshest in the county’s history deprives the regime of the financial and economic resources needed to sustain a solid social base among public sector employees, and hence hinders the consolidation of authoritarian rule. The regime’s reliance on this group gives it little latitude to pursue economic reform. The regime may survive in the short term but at the high price of continued repression and an inability to alleviate worsening socioeconomic conditions.

In fact, Al-Sisi reimposes an authoritarian rule in Egypt but in a different way than Mubarak.

Hosni Mubarak ruled Egypt by what is known as “authoritarian consolidation “that enabled his regime to maintain sociopolitical stability for decades.

“Authoritarian consolidation entails putting in place recognized and predictable rules of control to govern the interaction between different groups in the state apparatus, as well as between the state and society,” said Carnegie’s paper.

This was mainly achieved by state-controlled channels for institutions in every aspect as aggregation, representation, and intermediation between state and society, especially groups whose support the regime seeks.

Corporatist state bodies that monopolized interest representation on behalf of labor and business—for instance, the Egyptian Trade Union Federation and the Federation of Egyptian Industries—as well as through the ruling National Democratic Party (NDP), regulated patronage distribution and mediated with local communities and social groups.

Authoritarian consolidation allows a regime to be stable by depending less “on a frequent resort to repression of dissent and political opposition.” Therefore, the regime is less vulnerable to witness social and political instability in the form of public protests, mass demonstrations, strikes, and even coups, which raise the risk of abrupt changes in the structure of state power or the composition of the political leadership.

The Sisi regime has not created and preserved a broad and solid social constituency under authoritarian consolidation. However, the regime has depended “on a sociopolitical alliance made up of the military and security forces and groups of public sector employees, that was formed in opposition to the January 2011 uprising against Mubarak, to secure its own legitimacy and maintain social stability,” said Carnegie’s study.

In addition, following the military coup in July 2013, the military and security forces worked on the crackdown of the major opposition groups—namely the Muslim Brotherhood and its Islamist allies, together with activist groups such as the April 6 Youth Movement.

Moreover, the military regime had narrowed the public participation by putting tighter security controls on university campuses, and the authorities curtailed the activities of civil society groups and nongovernmental organizations, as well as their funding.

The government also expanded its formal and informal control over privately owned media, compelling outlets to voice a pro-regime line and to engage in self-censorship.

“However, these factors did not persist and could not contribute to the consolidation of authoritarian rule,” according to Carnegie. Meanwhile, the regime has failed to put in place institutionalized channels for mediation and interest representation of the social groups whose support it seeks to maintain.

It didn’t create a ruling party like those in place when Gamal Abdel Nasser, Anwar Sadat, and Hosni Mubarak were president. The parliament elected in late 2015 is fragmented, “with an amorphous pro-regime bloc that seems very unreliable when it comes to supporting the government’s economic policies. These factors suggest that authoritarian consolidation is not forthcoming.”

Al-Sisi regime tends to resort to more suppression although the crackdown of the Muslim Brotherhood and other political opposition have limited any forms of political participation . In addition, the scope of police repression has expanded, affecting the regime’s image and domestic legitimacy, even straining relations with the lawyers’, physicians’, and journalists’ unions that supported it when it took power. The crackdown has also drawn criticism from Western countries close to Egypt, as well as from international human rights organizations.

Moreover, Egypt’s military-led regime has based its attempts at consolidating authoritarianism on winning over public sector workers. Gamal Abdel Nasser, which formed the basis for authoritarian order after the military takeover/revolution in July 1952, the state would provide economic entitlements in return for the population ceding many of its political rights.

It paved the way for socioeconomic reforms, including land redistribution to middle peasants; the Egyptianization, and later the nationalization, of industries and services; and the expansion of the public sector after the adoption of the first five-year plan in 1960.Nasser’s reforms created a fairly large class of individuals dependent on the state, as well as a middle class that enjoyed free university education with graduates who found employment in the bureaucracy and state-owned enterprises,” said Carnegie.

Nasser’s economic military model would have been a good bargain, but” Egypt’s declining economic situation does not permit this indefinitely, the regime has had to consider introducing austerity measures, which would further restrict the benefits enjoyed by the public sector, “said Carnegie.

The turmoil in the country that escalated after the military coup has affected the wrecked economy left after Mubarak’s era. The withdrawal of foreign investment and tourism led to as severe shortage in the hard currency revenues.

As a result, the Egyptian government adopted strict measures that didn’t create a sociopolitical base for its authoritarian rule.

In the same context, the regime’s economic policies since 2013 have been driven primarily “by a preoccupation with consolidating itself by directing enough resources toward the coercive institutions of the state while at the same time securing the support, even if passive, of public sector employees, to better neutralize them,” said Carnegie.

According to Carnegie paper, “the first component of this strategy led the government to raise the salaries, benefits, and pensions awarded to the police, army officers, and judges, despite fiscal constraints in 2013 and afterward.”

The second component of the strategy—deriving from the old Nasserite alliance between the military and middle and upper bureaucrats—“is the neutralization of the broad base of public sector employees, estimated at one-third of the total workforce, in a way that spares the regime future social antagonism.”

In fact, the regime has maintained a huge wage and subsidy bills in order to attain this objective. But the problem with the regime’s approach is that there are not enough revenues to keep state-dependent workers and their families satisfied without substantial, uninterrupted capital inflows from abroad.

Since 2011, Egypt’s budget deficit and public debt have been increasing, in a manner that is, quite simply, unsustainable. A budget deficit that hovers around 13 % means greater inflation, higher interest rates, and the crowding-out of productive sectors from access to bank credit, leading to further economic deterioration.

Egypt’s economic crisis is structural and has deep sociopolitical roots. Overcoming this crisis, therefore, requires structural solutions. Political turmoil in Egypt and throughout the Middle East, plunging oil prices, and slow growth rates worldwide have all exacerbated existing problems. In the likely event that Egypt’s economic challenges worsen, the country may no longer remain as stable as it has been in the past two years.

Accordingly, the military-backed regime would likely respond in one of two ways as stated by Carnegie. One approach is to keep things as they are, for the longest time possible. In a misguided attempt to retain the support of public sector workers, the regime might maintain spending at current levels, despite growing deficits, an expanding public debt, and a shortage of foreign currency reserves.

This would lead to an increase in external borrowing in order to finance current expenditures on wages, subsidies, and basic imports of fuel and foods, leading to a further deterioration in the country’s balance of payments position. Such actions would also translate into higher inflation and, therefore, the erosion of the standard of living of the urban poor and middle classes. As a result, this might lead to social protest that the regime has been determined to restrict, or preempt, since 2013. More instability and the probable resort to even more extensive repression would, thus, preclude all attempts at authoritarian consolidation.

A second scenario could be for the Egyptian regime to introduce the necessary reforms to achieve the economic growth by attracting private domestic and foreign investment. “This would require strict action against vested interests in the state bureaucracy in a way that would be likely to endanger the regime’s own base of support,” said Carnegie.  Massive restructuring and downsizing of the bureaucracy would lead to labor strikes and other forms of public protest.

The regime would have two options for dealing with such protests: it could increase repressive measures or it could negotiate with public sector workers and other representative institutions. However, the regime always fear that more flexibility would also represent a crack in the current authoritarian order and its shift toward a softer form of authoritarianism, like that which existed under Hosni Mubarak during his last decade of rule that paved the way later for January Revolution in 2011.

Therefore, the al- Sisi regime’s current approach is banning and suppressing all kinds of opposition but at the same time, it is failing to create channels of interest representation and mediation and thus, authoritarian consolidation.

In this context,” repression would simply provoke more instability, while negotiations would merely underline the vulnerabilities of the regime. At a time when Egypt’s economic problems make it exceptionally difficult for the regime to sustain support in society, it is increasingly apparent that its ability to consolidate its power and return to the situation that prevailed under Mubarak, when authoritarianism was more institutionalized and flexible, is not an option without the regime making concessions to society,” said Carnegie’s paper.

The Al-Sisi regime is caught in a dilemma requiring a more durable solution. Sooner or later, the regime will need to find solutions to maintain reconstitution of Egypt’s political order and improve economic performance.

The re-imposition of authoritarian rule since 2013 that centered political authority largely in the president’s office, but even authoritarian regimes need to be based on rules around which public life and interest aggregation and mediation can be organized. According to Carnegie’s paper, “Institutionalizing such rules will, by necessity, become a priority for the Sisi regime, even if this imposes significant changes in its configuration and behavior, as well as its political and economic foundations. “