On March 15, 2015, less than a year after being elected President of Egypt, Abdelfattah el-Sisi addressed the Egypt Economic Development Conference. Surrounded by supporters, he stated that Egypt needs $200–300 billion USD in order to see “real change.” In January 2022, at the World Youth Forum, an event intended to supplant parliamentary politics, el-Sisi claimed that Egypt had spent $400 billion USD to “break the poverty trap,” a staggering figure for a country whose GDP stood at $424.67 USD billion in 2021.
The result of this massive expenditure, however, has been the impoverishment of the poor and the middle class, a debt crisis of unprecedented proportions, and a heavily transformed, ghettoized urban landscape. It is the result of a deliberate policy of militarized neoliberal state capitalism, which has had a devastating impact on Egyptians, becoming arguably the most enduring legacy of the el-Sisi regime.
The policy is simple yet devastating: a heavy reliance on mega-infrastructure projects, with dubious economic benefits to propel growth. But this strategy did not rely on the government’s own tax revenues, which are meager by regional and international standards; instead, it relied on massive borrowing at high interest rates, creating a tremendous burden on public finances.
In the 2024-2025 budget, 62 percent of all government expenditures will be used for debt servicing. This policy not only triggered a severe debt crisis, but also led to massive transfer of wealth from the lower and the middle classes to the regime elites, dramatically increasing poverty to 35.7 percent in 2022-2023 from 26.3 percent in 2012-2013, the year of the military coup that brought el-Sisi to power. These policies are rooted in the regime’s political economy, and its ideological construct. In essence, it is a deliberate experiment of social engineering using the coercive power of the state, with devastating consequences.
The regime model is based on two ideological pillars, a firm belief in the supremacy of the military over civilians, and a heavily paternalistic–almost colonial– view of the masses, especially the poor, as lazy and inept. This was reflected in el-Sisi’s statements and policies. For example, in December 2016, when asked about the military’s role in the economy, el-Sisi stated that it is only 1.5-2 percent, lamenting that it is not more and expressing a desire for it to reach 50 percent. This belief was reflected in how the military spearheaded megaprojects, either by direct implementation or subcontracting. More concerning, however, is that army generals now occupy vital positions in various economic sectors and participate, sometimes exclusively, in critical discussions with the president to define economic policy. The narrative of military supremacy extended beyond economic efficiency to include a belief in its moral supremacy and incorruptibility. This perspective has justified shielding the military from any form of civilian oversight, creating a setup where the military does not yield unprecedented power, but can also direct policy to accumulate wealth through an intricate series of opaque laws (for example tax exemptions), and a non-competitive bidding system that allows the military to assign contracts with limited transparency and no legal avenue for appeal by competing bidders. Essentially, a graft free for all.
The primacy of the military is combined with a heavily orientalist view of the citizenry, which justified policies that led to economic deprivation. Over the years, el-Sisi has voiced multiple complaints about his countrymen, ranging from Egyptian food consumption habits and excessive weight, to propensity to have multiple children and laziness. All playing an orientalist and racist trope and reflecting the overall class divide in the country, where the poor are held in deep contempt. This has not only paved the way for overt military dominance but has provided the ideological justification for massive cuts in social spending, under investment in healthcare and education, and appropriation of public funds by the military elites. This is justified by a simple logic that places the blame of poverty on the shoulders of the poor, a classic neoliberal view of individual responsibility, allowing the state to wash its hands of its social role.
These ideological constructs provided the justification for a political economy of poverty and deprivation. For example, the belief in military supremacy did not only pave the way for its overt dominance of the state and political system, it has also shielded it from all forms of accountability. This has allowed the military to not only expand its footprint at the expense of the private sector, but it has also allowed it to avoid transparency of its business operations, and paying taxes. Considering the regressive nature of the Egyptian taxation system, with 35.6 percent of tax revenues coming from VAT tax, effectively a consumption tax, and only 11.9 percent coming from corporate tax in the 2024-2025 fiscal year. This means that the burden of the debt is shifted to the shoulders of the poor and the middle class, while the regime elites are shielded from its cost. This is worsened by the continuous cuts in social spending, justified by the orientalist view of Egyptians, which is also pushing more people into poverty. In effect, the regime has constructed a wealth extraction dynamic to the benefit of the elites and the regime`s creditors to the detriment of the poor and the middle class.
This dynamic will have multiple effects, not only increasing poverty levels, but worsening existing wealth distribution to an unprecedented degree. Even though there is no reliable data on wealth distribution in Egypt, there are some indicators of this widening gap.
For example, in the first half of 2024, sales in the North Coast, an exclusive area for the rich, increased from 176 billion EGP to 331 billion EGP compared to the same period in 2023. This is the midst of a stifling economic crisis, which saw the price of subsidised bread increase by 300 percent in May 2024. It is worth noting that the entire state budget for subsided bread amounts to 125 billion EGP, less than half the sale volume in the North Coast for the first six months of the year. This deepening class divide will be one of the most lasting legacies of the regimes, and a substantial barrier to democratization. The fear of the poor is a simple and effective way to whip up support for the regime amongst the middle class, even when they suffer the most from its policies.
The rapid accumulation of wealth in the hands of a few is accompanied by a building frenzy of new mega-smart cities and urban renewal projects under the guise of alleviating congestion and providing affordable housing to the poor. There is, however, a much more sinister side. These projects are beyond the reach of the poor and are effectively used to create segregated urban spaces for the elites. The most notable example is the New Administrative Capital (NAC), the most expensive of the regime`s white elephant projects.
With a total budget of 300 billion USD, the first phase costing an estimated $58 billion USD, the NAC crystalizes the regime’s vision for Egypt. The NAC is a city for the rich, with the lowest cost per square meter starting at $753 USD and heavily securitized and easily controlled by the regime. The city will be monitored by 6,000 cameras for its planned 6.5 million residents. As the poor are banished outside the city and the regime moves the center of governance to it, the regime is insulating itself from the mass of the citizenry. A city built through the appropriation of public debt will be exclusively for the rich and will be an instrument for repression of the poor, left behind in troublesome Cairo. There are other less prominent projects, like the Maspero triangle in the middle of Cairo, which under the guise of urban renewal saw the removal of its inhabitants who were replaced by the better-offs. To place this in context, between 2018 and 2022, 57,343 housing units were evicted, affecting 2.8 million people, or ten percent of the population of Cairo and Giza, removing the poor from their homes for commercial development.
This will be the most enduring legacy of the el-Sisi regime: entrenched structural poverty, overaccumulation of capital in the real estate sector, and deep social polarization stemming from incredibly unjust wealth and income distribution. These dynamics, however, might help cement the regime`s grip on power, at least in the short to medium term. Fear of the poor will push the suffering middle class into the regime`s violent embrace, not away from it, even as it directly suffers from its policies. This support, however, is not endless, and the regime`s economic model will not offer a respite for the country’s economic woes. On the contrary, the masses of Egyptians, including the middle class, will continue to find themselves excluded from the increasingly segregated urban landscape. This case of urban separation can be the trigger for a wave of unrest that the regime is ill-equipped to handle, leaving behind ghost cities sunken in the sand.
Maged Mandour is an Advisory Group member of the Democracy Matters Initiative at the Middle East Democracy Center (MEDC). He is an Egyptian political analyst and the author of the newly published book, “Egypt Under El-Sisi: A Nation on the Edge.” Maged writes regularly for outlets including Middle East Eye, Arab Digest, and Sada, a journal of the Carnegie Endowment for International Peace and has made numerous media appearances as a commentator on Egyptian affairs. He is a graduate of the University of Cambridge, U.K.
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El-Sisi’s Silent Revolution
How Militarized State Capitalism is Widening the Class Divide in Egypt
Maged Mandour
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On March 15, 2015, less than a year after being elected President of Egypt, Abdelfattah el-Sisi addressed the Egypt Economic Development Conference. Surrounded by supporters, he stated that Egypt needs $200–300 billion USD in order to see “real change.” In January 2022, at the World Youth Forum, an event intended to supplant parliamentary politics, el-Sisi claimed that Egypt had spent $400 billion USD to “break the poverty trap,” a staggering figure for a country whose GDP stood at $424.67 USD billion in 2021.
The result of this massive expenditure, however, has been the impoverishment of the poor and the middle class, a debt crisis of unprecedented proportions, and a heavily transformed, ghettoized urban landscape. It is the result of a deliberate policy of militarized neoliberal state capitalism, which has had a devastating impact on Egyptians, becoming arguably the most enduring legacy of the el-Sisi regime.
The policy is simple yet devastating: a heavy reliance on mega-infrastructure projects, with dubious economic benefits to propel growth. But this strategy did not rely on the government’s own tax revenues, which are meager by regional and international standards; instead, it relied on massive borrowing at high interest rates, creating a tremendous burden on public finances.
In the 2024-2025 budget, 62 percent of all government expenditures will be used for debt servicing. This policy not only triggered a severe debt crisis, but also led to massive transfer of wealth from the lower and the middle classes to the regime elites, dramatically increasing poverty to 35.7 percent in 2022-2023 from 26.3 percent in 2012-2013, the year of the military coup that brought el-Sisi to power. These policies are rooted in the regime’s political economy, and its ideological construct. In essence, it is a deliberate experiment of social engineering using the coercive power of the state, with devastating consequences.
The regime model is based on two ideological pillars, a firm belief in the supremacy of the military over civilians, and a heavily paternalistic–almost colonial– view of the masses, especially the poor, as lazy and inept. This was reflected in el-Sisi’s statements and policies. For example, in December 2016, when asked about the military’s role in the economy, el-Sisi stated that it is only 1.5-2 percent, lamenting that it is not more and expressing a desire for it to reach 50 percent. This belief was reflected in how the military spearheaded megaprojects, either by direct implementation or subcontracting. More concerning, however, is that army generals now occupy vital positions in various economic sectors and participate, sometimes exclusively, in critical discussions with the president to define economic policy. The narrative of military supremacy extended beyond economic efficiency to include a belief in its moral supremacy and incorruptibility. This perspective has justified shielding the military from any form of civilian oversight, creating a setup where the military does not yield unprecedented power, but can also direct policy to accumulate wealth through an intricate series of opaque laws (for example tax exemptions), and a non-competitive bidding system that allows the military to assign contracts with limited transparency and no legal avenue for appeal by competing bidders. Essentially, a graft free for all.
The primacy of the military is combined with a heavily orientalist view of the citizenry, which justified policies that led to economic deprivation. Over the years, el-Sisi has voiced multiple complaints about his countrymen, ranging from Egyptian food consumption habits and excessive weight, to propensity to have multiple children and laziness. All playing an orientalist and racist trope and reflecting the overall class divide in the country, where the poor are held in deep contempt. This has not only paved the way for overt military dominance but has provided the ideological justification for massive cuts in social spending, under investment in healthcare and education, and appropriation of public funds by the military elites. This is justified by a simple logic that places the blame of poverty on the shoulders of the poor, a classic neoliberal view of individual responsibility, allowing the state to wash its hands of its social role.
These ideological constructs provided the justification for a political economy of poverty and deprivation. For example, the belief in military supremacy did not only pave the way for its overt dominance of the state and political system, it has also shielded it from all forms of accountability. This has allowed the military to not only expand its footprint at the expense of the private sector, but it has also allowed it to avoid transparency of its business operations, and paying taxes. Considering the regressive nature of the Egyptian taxation system, with 35.6 percent of tax revenues coming from VAT tax, effectively a consumption tax, and only 11.9 percent coming from corporate tax in the 2024-2025 fiscal year. This means that the burden of the debt is shifted to the shoulders of the poor and the middle class, while the regime elites are shielded from its cost. This is worsened by the continuous cuts in social spending, justified by the orientalist view of Egyptians, which is also pushing more people into poverty. In effect, the regime has constructed a wealth extraction dynamic to the benefit of the elites and the regime`s creditors to the detriment of the poor and the middle class.
This dynamic will have multiple effects, not only increasing poverty levels, but worsening existing wealth distribution to an unprecedented degree. Even though there is no reliable data on wealth distribution in Egypt, there are some indicators of this widening gap.
For example, in the first half of 2024, sales in the North Coast, an exclusive area for the rich, increased from 176 billion EGP to 331 billion EGP compared to the same period in 2023. This is the midst of a stifling economic crisis, which saw the price of subsidised bread increase by 300 percent in May 2024. It is worth noting that the entire state budget for subsided bread amounts to 125 billion EGP, less than half the sale volume in the North Coast for the first six months of the year. This deepening class divide will be one of the most lasting legacies of the regimes, and a substantial barrier to democratization. The fear of the poor is a simple and effective way to whip up support for the regime amongst the middle class, even when they suffer the most from its policies.
The rapid accumulation of wealth in the hands of a few is accompanied by a building frenzy of new mega-smart cities and urban renewal projects under the guise of alleviating congestion and providing affordable housing to the poor. There is, however, a much more sinister side. These projects are beyond the reach of the poor and are effectively used to create segregated urban spaces for the elites. The most notable example is the New Administrative Capital (NAC), the most expensive of the regime`s white elephant projects.
With a total budget of 300 billion USD, the first phase costing an estimated $58 billion USD, the NAC crystalizes the regime’s vision for Egypt. The NAC is a city for the rich, with the lowest cost per square meter starting at $753 USD and heavily securitized and easily controlled by the regime. The city will be monitored by 6,000 cameras for its planned 6.5 million residents. As the poor are banished outside the city and the regime moves the center of governance to it, the regime is insulating itself from the mass of the citizenry. A city built through the appropriation of public debt will be exclusively for the rich and will be an instrument for repression of the poor, left behind in troublesome Cairo. There are other less prominent projects, like the Maspero triangle in the middle of Cairo, which under the guise of urban renewal saw the removal of its inhabitants who were replaced by the better-offs. To place this in context, between 2018 and 2022, 57,343 housing units were evicted, affecting 2.8 million people, or ten percent of the population of Cairo and Giza, removing the poor from their homes for commercial development.
This will be the most enduring legacy of the el-Sisi regime: entrenched structural poverty, overaccumulation of capital in the real estate sector, and deep social polarization stemming from incredibly unjust wealth and income distribution. These dynamics, however, might help cement the regime`s grip on power, at least in the short to medium term. Fear of the poor will push the suffering middle class into the regime`s violent embrace, not away from it, even as it directly suffers from its policies. This support, however, is not endless, and the regime`s economic model will not offer a respite for the country’s economic woes. On the contrary, the masses of Egyptians, including the middle class, will continue to find themselves excluded from the increasingly segregated urban landscape. This case of urban separation can be the trigger for a wave of unrest that the regime is ill-equipped to handle, leaving behind ghost cities sunken in the sand.
Maged Mandour is an Advisory Group member of the Democracy Matters Initiative at the Middle East Democracy Center (MEDC). He is an Egyptian political analyst and the author of the newly published book, “Egypt Under El-Sisi: A Nation on the Edge.” Maged writes regularly for outlets including Middle East Eye, Arab Digest, and Sada, a journal of the Carnegie Endowment for International Peace and has made numerous media appearances as a commentator on Egyptian affairs. He is a graduate of the University of Cambridge, U.K.
Photo credit: U.S. Secretary of Defense/Flickr
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