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Red Herring & Black Swan: Egypt is No Anchor


Many European policymakers regard Egypt as a “stability anchor.” But with high population growth and increasing inequality the country is actually very fragile. Supporting the regime at the expense of human rights is a mistake.

More than nine years after the Arab uprisings started, the Middle East is still in turmoil. Syria, Yemen, and Libya are locked in brutal civil wars. Sudan, Iraq, Iran, Lebanon, and Algeria have witnessed a renewed wave of demonstrations. Tensions between Iran and Saudi Arabia are coming to a head. In Egypt, in contrast, the military-backed regime of general-turned-president Abdelfattah al-Sisi has put an end to public unrest and improved the macroeconomic situation.

Against this backdrop, many European policymakers perceive Egypt as a “stability anchor” and as simply being “too big to fail.” Take Charles Michel, president of the European Council. During a meeting with al-Sisi in Cairo on January 12, 2020, he referred to the country as “a point of security and stability in a region in turmoil,” highlighting efforts to fight terrorism and halt irregular migration in particular. (He thus pointed to two main reasons why the EU courts the Egyptian regime and turns a blind eye on al-Sisi’s unprecedentedly repressive and authoritarian style of government.)

The Egyptian regime nourishes this perception of stability by portraying itself as the only force capable of safeguarding peace and national unity. In case of major disruptions, it warns, there would be uncontrollable damage, namely with regard to migration and terrorism.

Not Sustainable, Not Inclusive

However, stability in Egypt is more fragile than thought in Brussels, and the regime is not promoting sustainable development, either.

Those who praise Egypt’s economic recovery base their assessment on macro-economic data. Since the government initiated an economic reform program in the context of a $12 billion IMF loan in November 2016, GDP growth has increased, tourism revenues and foreign currency reserves have recovered, and the budget deficit has been reduced.

These are positive trends, but al-Sisi’s government was only able to achieve them by going into debt. It borrowed dozens of billions, not only from the IMF but from several international financial institutions as well as Western and Gulf Arab states. This has sent public debt skyrocketing to an unprecedented level, and servicing debts today accounts for more than 30 percent of government expenditures.

Moreover, the regime failed to tackle the structural issues at hand, such as corruption and nepotism, insufficient competition and transparency, the military’s involvement in the economy, the large size of the informal sector, or the reliance on fossil fuels. All this does not indicate a truly sustainable economic recovery.

Even more worrisome is that this macro-economic growth has not improved living conditions for most Egyptians. The state-orchestrated mega-projects like building a new capital city, for which the regime spends billions of public funds, primarily benefit the elite. At the same time, the government is dismantling the welfare state. Spending cuts have reduced the quality of public education and undermined the public health system. Energy subsidies were cut and new (non-progressive) taxes introduced, leading to severe price hikes and putting a heavy burden on lower segments of society in particular. In consequence, poverty is increasing, and the middle class is being hollowed out.

Young and Thirsty

The deterioration of public services constitutes a severe legitimacy crisis for the regime. Since the era of another military-officer-turned-president, Gamal Abdel Nasser, Egyptian society has operated under an implicit social contract: the regime promises to satisfy the citizens’ basic needs in exchange for obedience. As long as the elite’s self-enrichment and the provision of services could be reconciled, this arrangement endured. Now, however, the regime is gradually retreating from the bargain, due to misguided policies as well as continuous population growth.

Egypt’s population is increasing by some 2 percent annually. It just reached the 100-million-mark, and is predicted to reach 128 million by 2030. This not only makes maintaining the welfare state more and more costly but also puts immense pressure on the job market. Neither state employment—for decades the main mechanism to combat unemployment—nor the private sector can absorb the 800,000 new jobseekers per year.

Egypt’s society is very young. A third is younger than 14 years, and 26.7 percent are between 15 and 29 years old. For them, the lack of social mobility and inequality of opportunity are particularly frustrating.

Moreover, population growth is straining resources to their limits and creating environmental concerns. Egypt is close to meeting the UN definition of absolute water scarcity and highly depends on the River Nile, which is providing more than 90 percent of fresh water. Yet the Nile is increasingly polluted, and many fear that Egypt’s share of Nile water will decrease due to Ethiopia’s construction of a massive hydroelectric dam. Cultivable land is also getting rare, resulting in high population density and food shortages.

Angry Citizens

As a result, many Egyptians feel that the rich live in abundance while the rest is getting poorer and poorer. Small-scale but significant protests erupted in September 2019 exactly because of this perception. They were triggered by videos released by an exiled former sub-contractor of the military, who, quite tellingly, blamed al-Sisi for building palaces while letting the citizens go hungry. He clearly touched a nerve.

As the regime is no longer fulfilling its part of the bargain, it should, logically, grant the people more rights. Yet it is doing the exact opposite. Under al-Sisi, repression and authoritarianism have reached unprecedented levels. The regime is ruthlessly silencing all dissenting voices. More than 60,000 Egyptians have been detained for political reasons since the military toppled former president Mohamed Mursi in July 2013. The regime targets not only political opponents, but virtually every individual who does not share its ideals, ranging from academics and journalists to artists, atheists, and homosexuals.

One of them is 28-year old Patrick George Zaki, an Egyptian activist who is studying at Bologna University. He disappeared at Cairo Airport on February 7, when he arrived for a family visit. 20 hours later, he re-appeared in the public prosecution office and is now charged with “spreading false news” and “disturbing the public order.” Unlike most other cases, his detention caught public attention. Within a few days, almost 200,000 people, both from Egypt and abroad, signed an online petition for his release. The regime’s uncompromising approach may have ended public unrest for now, but it polarizes society and, as the case shows, angers citizens.

Al-Sisi’s Regime Is Not the Solution

Dazzled by the prospect of state collapse, a fear that is continually fueled by the Egyptian regime’s rhetoric, the EU trades away democratization for stability, which in itself is a questionable approach. Now, however, it becomes ever more evident that al-Sisi’s regime is not safeguarding stability but jeopardizing it.

Thus the EU must reconsider its short-sighted approach. Continued repression will only make Egypt more unstable.