Egypt's army defends its businesses

2012-03-29 11:03
Cairo - Egypt's ruling military council has warned it will not allow civilians to encroach on the armed forces' extensive business enterprises. The rare comments from the military about its secretive economic interests come as it faces increasing demands for public scrutiny.

Major General Mahmoud Nasr, the deputy defence minister for financial affairs and a member of the ruling military council, defended the military's economic establishment, saying it was in the public interest. He said the generals have even lent the government money to prop up its failing finances during the turmoil that followed the popular uprising that ousted Hosni Mubarak last year.

His comments, published in the local media Wednesday, appeared aimed at winning public support in the face of unprecedented national scrutiny of the huge military economic sector.

The military has enjoyed near-autonomous power in Egypt for the last 60 years, providing all the country's leaders since the 1952 military coup that brought military officers to office. Over that time, it expanded its business ventures that gained it huge perks and privileges such as large government construction contracts and almost guaranteed well paid government jobs for its retired generals.

In recent years, it built a massive economic empire that is shrouded in secrecy and, according to some estimates, accounts anywhere between 15 and for 40 percent of the nation's GDP. The generals have never confirmed any figures.

The military council took over from Mubarak after his ouster in February last year in a popular uprising. It has promised to transfer power to a civilian administration by July.

Leaders of the uprising have demanded civilian oversight of the military budget. The new parliament — led by the Islamist Muslim Brotherhood, whose members have their own extensive and largely unaccounted-for network of businesses — has promised to work toward realising that demand.

Military budget

"We will fight for our projects, and it is a battle we won't give up on. We have sweated for 30 years, and we won't leave this for anyone to destroy," Nasr said, according to comments published in the independent daily Al-Shorouk. "We will not allow anyone, whoever they may be, to come near the projects of the armed forces."

Nasr defended the military's businesses, saying it was not trying to set up "a state within a state".

"This is a sincere and honest effort for which we pay taxes. Whoever targets it would be targeting Egyptian national security," he said, according to Al-Shorouk.

Nasr spoke at a conference on economic reform attended by a select group of prominent local journalists and writers on Tuesday.

Gamal Abdel-Gawad, a political science professor at the American University in Cairo, said the ruling generals are drawing red lines in their struggle to retain their special status as the transition nears an end.

"The military is not convinced it should accept the leadership of civilians," he said. "Meanwhile, the parliament in the past few months has not shown it can be trusted with discussing such important issues as arms or the military budget."

The Egyptian military receives around $1bn a year in US aid, one of the largest recipients. The current parliament spoke out against continued US aid, saying it infringes on Egypt's sovereignty.

Activists have also targeted the military business ventures, at times calling for a boycott of its products or questioning economic data provided by the generals.

The military's budget is largely unknown. Under Mubarak and previous leaders, military appropriations were discussed in general terms as part of the national budget.

Economic projects

The generals insist their economic interests have always been subject to public scrutiny through the Central Auditing Organization, which keeps records of public spending.

Nasr defended the military's right to hold businesses, saying they were needed to finance the Defense Ministry. He said the ministry receives only about 4.2 percent of the national budget but needs around 15 percent.

He said the economic projects, which include drinking water, electronics, food and hotels, yield about $200m a year in revenues, the state-owned Al-Akhbar reported.

He said the armed forces used its revenues to prop up the Egyptian economy in the post-uprising period, paying more than $2bn to support the Central Bank, to pay salaries and support the police and various ministries.

Nasr said one of the armed forces holding companies, the National Service Project Organisation, yielded about $1.3bn in profits between 1990 and 2011, according to his comments in Al-Shorouk.

NSPO includes four main companies working in manufacturing of canned foods and drinks, the bottled water and olive oil company, an Optronics company and a chemical and agriculture products company.

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