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The Egyptian Republic of Retired Generals

An elected parliament of a majority of Islamists has failed to recognize, or has ignored, the deep military penetration of Egypt's economy.
Foreign Policy | 09.05.2012
For most people in the world, retirement is a time of idleness and careful penny-pinching of pensions or savings. Senior Egyptian military officers, however, are not most people in the world. Upon retiring from his post, a senior officer in Egypt's military becomes a governor of a province, a manager of a town, or a head of a city neighborhood. Or he might run a factory or a company owned by the state or the military. He might even manage a seaport or a large oil company. Luckily for him, he also retains his Armed Forces pension, on top of the high salary for his new civilian job. This privileged group holds almost every high position in the state. Egypt is par excellence a republic of retired generals.

Egypt's first post-Mubarak presidential election is rapidly approaching, scheduled to begin at the end of May. Candidates of varied political stances are enthusiastically campaigning in media and touring the length of the country offering promises on everything from security to education to foreign policy. But amid this busy atmosphere, there is silence on the most sensitive and crucial question: Will any civilian winner be able to demilitarize the Egyptian state?

This election is expected to bring to office the first civilian president in post-colonial Egypt, after more than 60 years of rule by generals -- retired or active. Three military presidents and lately an armed junta have turned the country into a regime dominated by fellow aged officers. The hidden realities of how this republic of retired generals functions are shocking. Senior military officers are everywhere, from the Suez Canal to the national sewerage company. Meanwhile, the discourse of presidential candidates avoids even acknowledging this situation, much less making a case for demilitarizing the state.

Historically, military domination over civilian positions began under Gamal Abdel Nasser's socialist regime in the 1960s, decreased with Anwar Sadat's attempt at marginalizing the army in the government in the 1970s, and witnessed a sudden increase during the last years of Hosni Mubarak in the 2000s. 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. Using its presidential authority, the SCAF appointed an increasing number of retired officers to numerous civilian positions. The two powerless prime ministers were happy to add their signatures to their letters of appointment.

The Egyptian legal codes of civil service have allowed this situation to develop, as they grant the president arbitrary authority to hire and fire incumbents in high positions, including governors and managers of the public sector. 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. Article 16 of this law states, "the president of the republic issues decisions to appoint [employees] in senior positions." While the law stipulates that a medical council should check the health suitability of the employee before appointment, Article 20 exempts those hired by the president -- convenient for the retired military officers in their advanced years. Other articles exempt these presidential appointees from any tests to prove their qualification to the job and give only the president the authority to fire them. In 1992, Mubarak amended this law to authorize the president to order an unlimited number of renewals of terms of service for high-level incumbents. The SCAF has been occupying the seat of the president and enjoying this exceptional legal power since last year.

The Armed Forces' laws, on the other hand, do not mention anything with regard to securing civilian jobs for dismissed officers. That process takes place informally. The military retirement law, Number 90 of 1975, regulates issues of financial compensation at the end of service and assigns pensions based on rank, but does not include articles prohibiting, requiring, or encouraging placing retired officers in new jobs. 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 distinct class of military managers grows in size every year as new officers retire. 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. Depending on the rank at which they leave service and the degree of loyalty to the leadership, the officer can receive anything from a prestigious position like a governorship to a middling bureaucratic position like a public relations employee in a military manager's office.

Officers who desire civilian jobs receive crash courses in management and business administration in state preparation centers. For example, at the Leadership and Management Development Center (LMDC), they attend short courses, between a few days to several weeks, on topics such strategic management, communication with workers, and charismatic leadership or "personal attractiveness." As its main clients, LMDC lists enterprises in the public sector where the military likes to dominate: companies of oil, construction, chemicals, cement, food processing, and much more.

Retired generals manage two types of fields: upper bureaucratic positions and economic enterprises owned by the military.

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.

The state-owned oil sector is highly militarized, as retired generals run many natural gas and oil companies. They also tend to control commercial transportation. The head of the Suez Canal is a former military chief of staff. The heads of the Red Sea ports are retired generals as is the manager of the maritime and land transport company. In the ministry of health, the minister's assistant for financial and administrative affairs is a retired general, among many others in the bureaucratic offices of the ministry. There are dozens of retired generals in the ministry of environment. 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.

As Mubarak decided to privatize many public sector industries, and his son Gamal accelerated this plan in the 2000s, they transformed the state-owned enterprises into holding companies, which gathered public enterprises that engage in similar business under one umbrella. The state created several of these with the intention to eventually sell them. Military generals installed themselves in almost every holding company and their subsidiaries. When the SCAF suspended the former government's privatization drive last year, this was good news for those generals. They will remain in control with no competition from businessmen who could have bought the companies. For example, retired generals head the Water and Sewerage, Egypt Tourism, Food Industries, and National Cement holding companies in Cairo and their provincial branches.

Moreover, retired generals manage the vast enterprises owned by the military institution and produce goods and services for consumers rather than for military production. This includes chains of factories, service companies, farms, roads, gas stations, supermarkets, and much more. 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.

However, while this arrangement may work well for the retired generals, not everyone is happy. Civilians working under retired army personnel show continuous discontent about mismanagement, corruption, and injustice. During the last 14 months, after SCAF took power, numerous major labor strikes and sit-ins emerged in facilities managed by retired generals. In many incidents, the managers called on military police to end the labor unrest. For example, widespread protests were staged at military factories, the Suez Canal ports, the Red Sea ports, petroleum companies, a cement factory, factories of chemical industries, the Alexandria port, and the Water and Sewerage Company. The SCAF has condemned labor strikes at large, arguing that they harm the country's economy and "stall the wheel of production," but the largest of these strikes were staged in places where military managers rule. Labor strikes are primarily harming the military economic interests rather than the national economy.

In February 2011, some 2,000 workers and engineers in the petroleum sector protested their poor conditions, as well as the increasing militarization of jobs in the sector. While the retired army generals at the top were receiving thousands of pounds, the workers were earning very little. The following month, thousands of workers in the same sector joined the protests, this time from companies like Petrojet and Petrotrade. The military's response was aggressive: It abducted some of the protesters, sent them to military trials, and then sentenced them to prison. Defying the military, the workers renewed their protests in front of the People's Assembly a few weeks ago, but the Islamist-dominated parliament was helpless. The Suez Canal workers recently staged a series of protests against unjust treatment. In one of the protests, the workers blocked trains. In response, the Suez Canal Authority referred some of the workers to military prosecution and imprisoned others in order to intimidate the rest into silence.

Workers at the Arab Organization for Industrialization (AOI) staged one of the earliest protests. The AOI is a collection of 12 factories administered by former army chief of staff Lieutenant General Hamdi Wuhiba. In addition to Wuhiba, other retired generals manage most of these factories. The workers of four factories organized sit-ins in February and August of last year, and Wuhiba called on military police to disperse one of them. Angry AOI workers created several unofficial Facebook pages to voice their discontent. On one of these pages, I talked with a protesting laborer. "The AOI's problem is its administration," the worker wrote. "It is a bunch of retired army generals who came to the AOI to get both a pension from the army and a salary from the AOI. The problem with the AOI's bylaws is that they vest all powers to the lieutenant general, as though he was the word of God." I also met with several of the organizers of these Facebook pages who were prosecuted for using this social network to criticize their military administrators.

After I publicly criticized Wuhiba in newspaper columns, the former chief of staff invited me to visit AOI so he could show me how justly he treats his workers. Listening to the distinguished man speaking for six hours, I learned about the embedded conventions in the minds of the class of military managers. I asked him: Why are you in this position managing all these factories when you have no previous experience whatsoever in manufacturing? According to his statements, 70 percent of AOI's production is civilian not military. His answer was that military officers are the best in management because they are trained in administration. Thus, if you open any civilian job, he adds, you will always find that the most suitable applicants come from the military. "The military produces the best managers," Wuhiba said. What they are managing does not matter. While justifying the military running their own vast economic enterprises, General Mahmoud Nasr, the minister of defense's assistant for financial affairs a member of SCAF, revealed the same mindset. He stated that serving in the military is all about learning good management.

Members of the class of military managers do not share the same social origins and are free of ideological stances. They come from a variety of social backgrounds, as they do not have to be originally rich or from bourgeois families, as is typically the case among the business elites in Egypt. 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. Those in middle bureaucratic positions lack political ambition, but those in upper jobs who enjoy good connections might aspire to reach the highest positions of a province governor or a cabinet minister.

Amidst this peculiar milieu for an underdeveloped country, the presidential election to choose the first civilian leader of the state in 60 years is approaching. In two weeks, a winner, either an Islamist or leftist, will take over power from the SCAF and immediately execute ambitious plans to achieve economic prosperity. However, in order to apply these plans -- detailed in candidates' platforms -- the winner needs first to kick out retired generals, who lack necessary knowledge and experience pertaining to economic development, from the bureaucracy and the public enterprises. Strangely enough, presidential candidates of all political stances refrain from raising the issue of demilitarizing the state. The two candidates who claim to be the most revolutionary, the former Muslim Brother Abed Moneim Aboul Fotouh and the Nasserite Hamdin Sabbahi, do not refer at all in their published platforms or spoken rhetoric to this crucial dilemma. It is not clear whether this is out of lack of awareness, fright, or in order to please the armed ruling elite.

Over the last five months, an elected parliament of a majority of Islamists has failed to recognize, or has ignored, the deep military penetration of Egypt's government and economy. The parliament is now hopelessly struggling to gain a portion of power from the SCAF. With candidates either unaware of the issue or driven by fear, an elected president will certainly fail to demilitarize, and nothing will change.