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11. Retain, Restructure, or Divest? Policy Options for Egypt’s Military Economy

Author:
Yezid Sayigh
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The Egyptian military has been on a dramatic expansionary trajectory since seizing power in July 2013. Having previously been an economic backwater, the Egyptian Armed Forces (EAF) and other military agencies have spearheaded the enormous state-led investment strategy that President Abdel Fattah el-Sisi has pursued since he came to office in 2014. The military controls a vast economic portfolio. It manages a significant share of the overall volume of publicly contracted infrastructure and housing. It builds industrial zones and produces capital goods, consumer durables, transport and heavy goods vehicles and parts, and information technology equipment. It undertakes associated retail, owns commercial media companies and hotels, and is rapidly increasing its stake in agriculture, fisheries, and mineral extraction. As of September 2021, the military even has a monopoly on the production of school meals. The Ministry of Defense (MOD) has formally controlled the use of state land by any civilian individual or entity, whether private or public, since 2001. The Ministry of Military Production (MOMP) is now one of two bodies that approves the import of foreign goods or services by government agencies. Military representatives sit on national boards, including for planning and sustainable development; feed into policy direction in several sectors, including the manufacturing industry, telecommunications, digital transformation, market development for electric vehicles, and rural development; and head major presidential initiatives, including the Long Live Egypt (Tahya Misr) development fund and the company responsible for constructing Egypt’s new administrative capital. Plans are underway to increase the capitalization of military companies by inviting private investment through the Egyptian sovereign wealth fund. What I have called an “officers’ republic”—comprising thousands of senior EAF retirees embedded in government ministries and agencies, regulatory and operational economic authorities, local government, and state-owned enterprises—complements the formal military economy. Military agencies and companies provide significant economic benefits. Military-managed public investment in transport infrastructure, for example, facilitates the movement of people and goods and expands access to external markets and investment opportunities. The construction of social housing for low-income groups addresses a serious shortage and assists government efforts to regenerate the informal settlements and slums where approximately one in seven Egyptians live. New industrial zones and extensive agricultural greenhouse projects attract investors, both domestic and foreign, contributing to economic growth and employment. And lower middle–class customers benefit from the expanding range of locally made consumer goods at affordable prices, alongside cheap meat and poultry imports, subsidized health services, and free food baskets for the poor. Why, then, should Egypt reconsider the military’s role in the economy?
Topic:
Armed Forces, Economy, Business, and Military
Political Geography:
Middle East, North Africa, and Egypt

12. How Huawei’s Localization in North Africa Delivered Mixed Returns

Author:
Tin Hinane El Kadi
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
Topic:
Development, Science and Technology, Telecommunications, Huawei, and Digital Space
Political Geography:
China, Asia, Algeria, North Africa, and Egypt

13. Reckless Abandon: Why Tunisia Can No Longer Delay a Border Free Trade Zone

Author:
Hamza Meddeb
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In 2012, Tunisia announced the establishment of a free trade and logistics zone (FTZ) in Ben Guerdane, near the Libyan border. The aim is to develop marginalized southeastern border regions and formalize informal economic actors. However, the plan has stalled due to institutional resistance, political divisions, and an incapacity to exploit international geopolitical rivalries. If this persists, the project may become irrelevant because of emerging FTZs in Libya, denying Tunisia revenues its ailing economy needs.
Topic:
Geopolitics, Economy, Borders, and Free Trade
Political Geography:
Libya, North Africa, and Tunisia

14. The Hidden Face of Informal Cross-Border Trade in Tunisia After 2011

Author:
Hamza Meddeb
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Despite the heavy-handed approach to security that has been adopted at Tunisia’s land borders, informal cross-border trade continues to thrive. Land corridors have been shut down, but the continued dynamic activity in maritime corridors has compensated for this loss, allowing Turkish and Asian consumer goods adapted to the declining purchasing power of the Tunisian population to penetrate local markets. The dynamism of Tunisia’s maritime corridors owes much to the emergence of small entrepreneurs and underprivileged outsiders who operate informally through trade networks connecting Tunisian and Asian ports. Some well-established firms also have adopted informalization strategies to circumvent trade barriers and restrictions against bilateral trade between Turkey and Tunisia. The rise of these informal networks and approaches reflects a growing trend: the progressive shift of Tunisia’s trade away from Europe and the rise of Turkey and China as major trade partners.
Topic:
Borders, Trade, and Informal Economy
Political Geography:
China, Europe, Turkey, North Africa, and Tunisia

15. Algeria’s Borderlands: A Country Unto Themselves

Author:
Dalia Ghanem
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Smuggling goods across the border between Algeria and Tunisia has created a parallel economy for marginalized border populations. Law enforcement and smugglers alike must navigate these gray zones in state authority. In Algeria, state formation remains an evolving process, as evidenced by the situation in the country’s northeastern border regions. With Algerian officials in these areas permitting smuggling of petrol and certain other commodities over the border with Tunisia and smugglers weeding out security threats even as they go about their illicit trade, the two ostensibly adversarial parties complement each other. This unusual relationship furthers the intrusion of the state into citizens’ livelihoods even as it manipulates state authority.
Topic:
Law Enforcement, Economy, Borders, Trade, and Smuggling
Political Geography:
Algeria, North Africa, and Tunisia

16. Tunisia’s Wake-Up Call: How Security Challenges From Libya Are Shaping Defense Reforms

Author:
Frederic M. Wehrey
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The escalation and spillover of Libya's conflict has posed mounting security challenges for Tunisia and exposed shortfalls in the country's defense transformation, in the areas of capability gaps, interagency coordination, intelligence sharing, strategic planning, and in the military's relationship with foreign security patrons.
Topic:
Security, Defense Policy, and Conflict
Political Geography:
Libya, North Africa, and Tunisia

17. Breaking the Cycle of Gender Exclusion in Political Party Development

Author:
Saskia Brechenmacher and Caroline Hubbard
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Political parties around the world face a crisis in public confidence. Many citizens view them as inaccessible and unresponsive to their concerns. Parties pose specific challenges for women, who face both formal and informal barriers to participation, including opaque nomination procedures, violence, and parties with hypermasculine cultures. The formation of new parties during periods of political transition represents a potential opportunity to break these patterns. Transitions can be openings to transform the broader political, legal, and social barriers to an inclusive kind of politics. In these moments of flux, the development of new party branches and rules, as well as the renegotiation of broader institutional frameworks, can enable women and other marginalized groups to push for greater political representation within party structures. What factors influence the level of gender inclusion in processes of party development? This question is central for policymakers, advocates, and practitioners seeking to support inclusive democracy and gender equality in transitional societies and beyond. To shed light on this topic, this study investigates gender inclusion in three types of party formation that commonly unfold during political transitions: a social movement to a party (as exemplified by Ennahda in Tunisia); an armed movement to a party (as illustrated by the African National Congress [ANC] in South Africa); and a dominant party to a breakaway party (as shown by the Mouvement du Peuple pour le Progrès [MPP] in Burkina Faso).
Topic:
Gender Issues, Women, Inequality, and Political Parties
Political Geography:
Africa, South Africa, North Africa, Tunisia, and Burkina Faso

18. The Egypt-Sudan Border: A Story of Unfulfilled Promise

Author:
Sherif Mohyeldeen
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Along the Egypt-Sudan border, tensions have been rising for several decades despite limited efforts at cooperation. Both countries need to reexamine their border policies to prevent further escalation. Since Sudan’s independence in 1956, its border relations with Egypt have been characterized more by mutual suspicion than by peaceful exchange. This legacy has been exacerbated over the decades by myriad obstacles and conflicts, particularly over the disputed Halayeb triangle, even if both sides did try to improve relations after Egypt’s uprising in 2011. Border communities, suffering from this reality, have pushed for improved ties, but mistrust has prevailed to the detriment of both countries.
Topic:
Regional Cooperation, History, and Borders
Political Geography:
Sudan, Middle East, North Africa, and Egypt

19. The Volatile Tunisia-Libya Border: Between Tunisia’s Security Policy and Libya’s Militia Factions

Author:
Hamza Meddeb
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Along the border between Tunisia and Libya, informal trade agreements led to a tight-knit border economy. But political changes in both Libya and Tunisia have fundamentally altered the economic and security landscape. The 2010–2011 uprisings disrupted a long-standing informal arrangement governing border trade between Tunisia and Libya. Over the following decade, as Libya disintegrated into mutually hostile fiefdoms, Tunisia maintained its unity, transitioned from authoritarian to democratic rule, and increasingly shunned official dealings with competing Libyan power centers. As such, grassroots cross-border agreements initiated by and between nonstate actors became the norm, albeit with the acquiescence of the Tunisian state. Yet these agreements have failed to constitute a sustainable mechanism for the trade that Tunisia’s eastern borderlands need for survival.
Topic:
Security, Economy, Borders, Trade, and Militias
Political Geography:
Libya, North Africa, and Tunisia

20. Algeria’s Borderlands: A Country Unto Themselves

Author:
Dalia Ghanem
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Smuggling goods across the border between Algeria and Tunisia has created a parallel economy for marginalized border populations. Law enforcement and smugglers alike must navigate these gray zones in state authority. In Algeria, state formation remains an evolving process, as evidenced by the situation in the country’s northeastern border regions. With Algerian officials in these areas permitting smuggling of petrol and certain other commodities over the border with Tunisia and smugglers weeding out security threats even as they go about their illicit trade, the two ostensibly adversarial parties complement each other. This unusual relationship furthers the intrusion of the state into citizens’ livelihoods even as it manipulates state authority.
Topic:
Economy, Borders, and Smuggling
Political Geography:
Algeria, North Africa, and Tunisia