Introduction: a regime both resilient and fragile
The rise and fall of the revolutionary movement in Egypt caught observers by surprise, twice. Until the January 2011 uprisings, the case of Egypt was determinedly situated as an example of resilient authoritarian neoliberalism: an impressively growing market-based economy that effectively manages popular resistance through violent force. A brief hiatus to this arose after the success of these uprisings in overthrowing the long-ruling tyrant, President Hosni Mubarak, and the holding of democratic elections for the first time in the republic’s history. The unanticipated political turnaround encouraged observers to briefly discard dominant presumptions about the resilience of this authoritarian neoliberal regime, redirecting the academic discourse to the analysis of its apparent fragility, before the return of authoritarianism with Field Marshal Abdel Fattah El Sisi’s coup in July 2013 brought the resilience thesis back to the fore.
This see-saw reflects an issue more complex than mere misunderstanding: both theses, in a way, are true. On the one hand, the Egyptian regime failed to instate an alternative hegemony after the collapse of the nationalist-socialist hegemonic project that framed the nation’s de-colonial moment in the 1950s–1960s led by President Gamal Abdel Nasser. This failure continues to deprive the regime of a social base that grounds its rule, leaving it reliant primarily on outright coercion. Once the means of coercion are restricted by international pressure or institutional resistance (mainly by the military), the fragility of the regime readily appears. On the other hand, however, the web of financial networks that the regime serves, encompassing both the military and the international elite, alleviates the aforementioned pressures and resistance. Through a duality of coercion at the social level and rent distribution at the elite level, the post-Nasser regime has been capable of prolonging its power in the absence of hegemony, so long as the endeavours of financial appeasement are unhampered.
Examining the Egyptian regime from this perspective, the two monographs under review explain the easy collapse and prompt return of the authoritarian neoliberal regime in the period between the 2011 uprisings and the 2013 coup as manifestations of the same financial politics that constituted the historical bloc. Beginning with Nasser’s failed hegemony, Sara Salem unpacks the post-Nasser neoliberal ‘turn’, how the remnants and revenants of Nasserist memories contested and complicated it, and how these complications manifested themselves in the recent collapse and re-emergence of the neoliberal regime. Amy Holmes does the opposite; she begins from the present and looks back at history to unpack the legacies that are implied for the current regime. Their variant contributions notwithstanding, this review focuses on the analytical economic history that these two books together provide and its demystification of the concurrent fragility and resilience of the authoritarian neoliberal regime in Egypt.
Financialisation: the financial class versus the working class
In Anticolonial afterlives in Egypt: the politics of hegemony, Salem deploys a historical sociological approach to unpack the class dynamics that shape the politics of contemporary Egypt. She begins from the collapse of Nasser’s nationalist-socialist hegemony with the strategic and political defeat of the June War of 1967, his sudden death shortly thereafter, and the fundamental economic and political turnaround placed on the regime by his liberal successor, President Anwar El Sadat. Sadat replaced the Nasserist social project with a chiefly economic project that sought to compensate briskly for its financial deficits by breaking the market open for direct investment with an economic liberalisation policy, commonly known as the Infitah (literally ‘the open door’). The immediate political implication of this policy shift was losing the support of the traditional social base of the Egyptian postcolonial regime, the working class, the exploitation of which was a central mandate under the Infitah policy, strategically premised on the promise of cheap labour and investor-centric labour laws.
As the regime openly abandoned its main client class, a crisis of hegemony was imminent. Since then, Salem argues, the regime has never succeeded in resolving this crisis. Instead, both Sadat and his successor, Mubarak, managed to relegate the crisis through the micromanagement of social grievances by direct state subsidies – a strategy she labels ‘damage control’. Despite recurrent waves of unrest, the two leaders seemed capable of controlling every contentious situation with a mixture of coercion and subsidy-based concessions – until a sudden decrease in state revenues caused by the Gulf War of 1990–1991 and its detrimental implications for tourism, emigrant remittances, and Suez Canal services limited the state’s capacity to continue on its route of subsidy-based micromanagement. On the verge of bankruptcy, Mubarak was forced to accept a lifesaving financial assistance package from the International Monetary Fund (IMF). The package was conditioned by an Economic Reform and Structural Adjustment Programme (ERSAP) that installed stern limits on state expenditures, giving rise to a far more contentious chapter of regime–working-class relations.
The combination of the IMF package and the ERSAP also gave rise to a fundamental shift in the structure of the Egyptian economy, as it led to unprecedented activity in the fiscal market. This fiscal activation, in parallel with the withdrawal of the state from many of its traditional fiscal duties, created a surge in financial capital available on the market. Nonetheless, while this capital was in need of borrowers, the economy was still too precarious to endure debt risks. The expanding capital market, thus, could cater to only a tiny segment of loan seekers: established capitalists who held sufficient assets to annul the risks of their financial insolvency. The large supply of money targeting a tiny number of potential borrowers drove interest rates significantly down, encouraging this niche class to extract more loans.
However, as access to loans was tied to an abundance of financial assets, this class was encouraged to use these loans not for the creation of productive businesses, for which dividends require time to mature and thus limit the exploitation of cheap capital available on the market, but to simply buy more assets. By purchasing more assets, the investor expands their capacity to acquire further loans, which could then be used to purchase more assets, and so on. Profits were predominantly generated from inflation in asset prices caused by the combination of low interest rates and rapid growth in nominal GDP rather than by any real added value. The economy was thus restructured on the model of investment banks in which borrowing, buying, and reselling form standard processes of operation and the routes to wealth creation.
The accumulation of wealth through this low-risk, highly rewarding and almost entirely rent-based process gradually but steadily formed a powerful class of capital owners – what Salem calls the ‘financial class’. As its power and wealth expanded over the years, this class occupied a pivotal position in the Egyptian regime. Not only was this class vital to the neoliberal project of economic growth and reform, but it also served as the main source of financial reassurance to the IMF, other international lenders, and regional and global investors. The reassurance of these global stakeholders was crucial not only to the sustainability of financial flows inwards, but also to the sustaining of international interest in the regime’s stability to secure a flow of returns outwards. The regime’s political and economic reliance on these stakeholders encouraged it to promote their clientelist class to the centre of the Egyptian regime. Thus, in July 2004, for the first time in the history of the republic, Mubarak appointed a cabinet of ministers recruited predominantly from the pool of financial capitalists (instead of the usual bureaucratic or military technocrats).
This ‘cabinet of businessmen’, as it was commonly referred to, was impressively successful in achieving the main task for which it was appointed: neoliberal reform. In its first four years, it managed to triple the real value of foreign direct investments, skyrocket state revenues from privatisation (70% of total revenues from privatisation since 1991 were received in those four years), and sustain a steady rate of GDP growth of over 7% per annum, before its progress was relatively hampered by the global financial crisis in 2008. These achievements were recognised by the Bretton Woods institutions, ‘earning Egypt the title of the region’s top reformer from the World Bank in 2006, 2007, and 2008. In 2008, Egypt was also crowned the world’s top reformer’ (Salem, 2020, 218). Such recognition reinforced the power and ambitions of the new financial class, giving rise to a powerful network that promoted the bequeathing of rule to Egypt’s most prominent investment banker and Mubarak’s youngest son, Gamal Mubarak.
Ordinary citizens, however, had no reason to endorse this financial boom. The neoliberal reforms did not invite the kind of private investments that create jobs, improve incomes or enhance market competitiveness. In fact, they did quite the opposite. On the one hand, rapid privatisation drove the country’s main employer, the state, out of the market. On the other hand, private investments were mostly put in non-productive assets employing a very small workforce. By the late 2000s, the Egyptian economy was controlled by ‘twenty to twenty-five’ financial dynasties, each employing an average of ‘3000’ employees (Ibid., 230). A single state-owned company of those privatised, Misr Spinning and Weaving Company (MSWC), employed approximately one-third of the total workforce of all of these dynasties combined. The aggressive neoliberal reforms, thus, significantly harmed employment, in terms of employment rates, employment conditions, contracted hours, job quality, job security and real income. Add to these factors the rapid inflation in prices caused by the decreased interest rates, and social hostility towards the ‘top reformer’ cabinet becomes easily comprehensible.
Rather, the financialisation of the economy created a situation of socio-economic bipolarity. This, as Salem points out, was evident from the largest industrial strike wave before the 2011 uprisings being mobilised in the same period in which the Egyptian government was internationally celebrated for its impressive economic performance (2006–2008). Sparked by female workers from the MSWC in December 2006, the strike against neoliberal cuts in employment benefits prompted workers from across Egypt’s main industrial city, El Mahalla, to engage in various forms of industrial action. Incrementally gaining momentum, the movement brought El Mahalla to a total halt in April 2008. Later, as the global financial crisis in 2008 also affected segments of the middle class, the activist networks formed in these industrial actions significantly expanded. These expanded networks were at the centre of the broader and more complex wave of uprisings that began in January 2011.
The old guard meets the old clients: invoking the Nasserist pact to corner the financial class
Understanding the protest movement that culminated during the period between 2011 and 2013, therefore, begins with an unpacking of its origins in 2006 to 2008. Three characteristics of these origins are highlighted in Anticolonial afterlives in Egypt: the centrality of economic grievances, disconnection from higher politics, and the haunting legacy of Nasser’s socialist promises. In manoeuvring around the firm embargo on political dissent, working-class activists managed to gather attention for their case as a human cause that was less contentious and more important than politics. This fact manifested later in slogans chanted in the January 2011 demonstrations, originating from the earlier protests of El Mahalla, with ‘bread’, ‘human dignity’, and ‘social equality’ the most widely reverberating.
Disconnection from higher politics, Salem clarifies, was more than a mere attempt to ‘humanise’ the workers’ economic grievances. This manoeuvre also had an important historical underpinning: it brought to the fore the original social contract of the postcolonial military regime that ruled the republic since its declaration in 1953, the Nasserist pact. This pact was based on the state provision of social welfare in return for political obedience. Hence, by speaking as political clients rather than rivals of this regime, the activists held the regime to its own original promises.
Salem emphasises that these promises were never achieved in practice, even by Nasser himself. However, the Nasserist project still served as the ‘historical alternative that never quite materialised’ but lurked as an imaginable and attainable possibility of politics otherwise (Ibid., 260). Like a ‘ghost’, she argues, Nasserism derived its power from the very fact that it never existed in actuality, offering a degree of flexibility in articulation that facilitated pragmatic mobilisation and negotiation. The imagined memory of Nasser managed to bring together a grassroots movement that resisted not the ruling regime per se, but the aggressive neoliberal turn that it took with the rise of the financial class. It also served to emphasise the distinction between the financial class and the regime as a whole, which was instrumental in mobilising, at a later stage, some elements of the regime against others. By January–February 2011, negotiation and eventual cooperation between the pragmatic resistance movement and the regime’s old guard, spearheaded by the military leadership, managed to politically corner the post-1991 financial class and the security regime that protected it.
By underscoring the socially perceived and historically grounded distinction between the ruling regime in its totality and the financial class that later took it over, Salem’s account demystifies the cautious yet strategic collaboration between the protestors and the military during the contentious period of 2011–2013. On the one hand, it explains the protestors’ willingness to accept the takeover of the state by the military, twice: after the removal of Mubarak, and after the coup against the democratically elected president, Mohamed Morsi. While the army was no doubt a crucial element of the ruling class, it was not at the forefront of post-1991 repression, the latter led by the financial class headed by Gamal Mubarak and the security apparatus assigned the task of cracking down on dissent to the financialisation project.
On the other hand, it explains why the military leadership refused, in the two cases of Mubarak and Morsi, to side with the regime against the protestors. While the military did accumulate high rents out of the post-1991 reforms (mainly from the selling of land and capital to the financial class and the tax-exempt business opportunities directly contracted to it by the two heads of states), the rise of the financial class repositioned the military as a privileged partner in the business/financial field rather than a policymaker setting the rules for this field. In Mubarak’s tenure, this task of business policymaking was delegated to the ruling National Democratic Party’s ‘Policies Committee’, founded and headed by Gamal Mubarak in 2002 and composed of the most influential members of the financial class, many of whom were also ministers in the ‘cabinet of businessmen’ of 2004–2011. The revolution against Mubarak dissolved the policies committee but was about to give rise to a civilian arrangement, headed by Islamist businessmen – for they were all men – which would continue the replacement of the military in its traditional roles of overseeing the economy and international business.
The military was therefore encouraged to intervene twice: to contain (Gamal) Mubarak’s financial class, then once again to contain the anti-Mubarak financial class; in both cases invoking the Nasserist legacy that frames the military as the traditional patron of the working and middle classes. Then, after consolidating its power, the military regime further expanded the financialisation project; but this time with an arrangement that places the military at the centre of domestic and international financial networks. By shedding light on the centrality of Nasser’s socialist ‘ghost’ in this arrangement, Salem’s account reveals both the complexity and the irony of the current neoliberal military order.
Coup from below: shying away from alternative hegemony after Mubarak
Anticolonial afterlives in Egypt, however, falls short of explaining why the successive regime articulations in the aftermath of Mubarak did not attempt to construct an alternative hegemony. This fact is particularly paradoxical in the case of Morsi’s regime, which, by nature of being democratically elected and rising on the shoulders of a popular revolution, was already imbricated in relative consensus. That Morsi’s tenure did not witness any significant changes in the traditional mode of governance (reliant on coercion, financial rents and sporadic subsidies) is worthy of special attention, as is the reluctance of the later Sisi regime to utilise the broad base of support that it once had to articulate an alternative hegemony rather than promptly turning to extreme coercion. In focusing on the period following the fall of Mubarak and the opportunities for hegemony that it gave rise to, Amy Holmes’ Coups and revolutions: mass mobilization, the Egyptian military, and the United States from Mubarak to Sisi explains why these opportunities were not exploited.
Holmes’ analysis begins from the contentious period of the late Mubarak regime, marked by the centrality of the financial elite, police and security forces, international stakeholders (particularly the United States), and one additional regime actor overlooked in Anticolonial afterlives in Egypt and in most analyses of the Egyptian regime: the opposition elite. In contesting the pervasive juxtaposition of the opposition elite with the regime elite, Holmes deploys a class lens that brings them together as one ruling political/financial bloc. Through this lens, she not only explains the reluctance of the working- and middle-class networks that mobilised against Mubarak, Morsi, and the transitional military order between them to associate themselves with the opposition elite, but also makes sense of what faultily appeared as a paradoxical turnaround in the agenda of the contentious movement when this elite endorsed the coup and its crackdown on dissent.
Holmes seconds Salem’s observation that the ruling elite in Egypt witnessed significant qualitative changes with the financialisation of the economy in the latter half of Mubarak’s rule, manifested in the foundation of the Policies Committee in 2002 and the appointment of the cabinet of businessmen in 2004. The new class of business elite (‘the financial class’) not only contested the powers of the traditional political class but also contested the dominant modes of economic production and hence the dominant modes of political contention. Ideological contentions took a back seat to pragmatic class contentions, which contested the dividends of the new political economy. The immediate manifestation of this change was a recurrent refusal of anti-neoliberal grassroots movements to be represented by their ideological allies within the political/financial elite.
A more significant manifestation, however, was the paradoxical harmony that came to define the relations among all actors contending at the level of elite and official politics. It was during this period that the traditional Islamist opposition, led by businessmen of the Muslim Brotherhood, enjoyed unprecedented freedom in its political, economic and cultural activities, facilitating its unprecedented representation in the parliament in 2005 (20%) and its later rise to power after the fall of Mubarak.1 This period was also one of significant promotion of liberal opposition figures, mostly from affluent families leading on the financial front, to the centre of political discourse. The result was an ideologically broad umbrella of multi-headed opposition figures given relative freedom to establish media corporations, run for political office and openly oppose the government and head of state, but unified by common class interests in the unhindered continuity of the financialisation project.
It is this multi-headed opposition that partnered with the military in inheriting the state after Mubarak. The partnership was far from smooth, but despite all of their disagreements, the partners converged in their common interest in limiting industrial concessions to the working class. The discourse of distinction between the ‘revolution’ as a national project and the industrial demands as ‘factional’ financial aspirations served to keep the force of revolutionary change away from the economic system that benefited the diverse ideological constituents of the post-Mubarak political/financial elite. As such, the movement resisting financial exploitation was, ironically, framed as committing sporadic, selfish acts that were divisive of the revolutionary front rather than part and parcel of the revolutionary project itself. By isolating the industrial movement from the political democratisation project, the middle-class opposition could expand their political turf through procedural democracy without risking their financial privileges.
The result was the extension of the social bipolarity that motivated the revolution to also comprise a political bipolarity in which the middle class enjoyed relevant democratic freedom at the same time that working-class demands were violently repressed. It thus makes sense that the originally industrial networks mobilising against Mubarak continued their resistance despite the democratic order, both because the officials to which this order gave rise (predominantly from the Islamist financial class) did not represent working-class interests and more significantly because the whole project of post-Mubarak elitist democracy excluded the working class from its emerging political articulations.
The continued contentions resulted in the failure of the democratic regime. On one hand, it placed pressure on its ability to articulate a hegemonic proposition that resolves the tension between the dissident working and lower-middle classes and the ruling financial class. On the other, the extended series of strikes and protests hindered economic production, limiting the regime’s ability to finance subsidies and/or rent distribution policies of ‘damage control’. As both hegemonic articulations and damage control policies were financially impeded, the collapse of the democratically elected regime became a function of whether the military forces would be willing to protect the regime by force.
Such a willingness on the part of the military forces was highly improbable due to a conflict of interest not between these institutions and the democratically elected regime in particular, but between them and the developing democratisation project writ large. Holmes highlights how a democratic hegemony was expected to increase public scrutiny over military expenditures, encourage legal checks on their fringe benefits, and eventually cut their excessive budgets once their coercive endeavours became less central and imperative to the regime’s durability. To avoid this outcome, the military leadership utilised the extended failure of hegemony to stage a coup in the name of the revolution, repealing nascent aspirations for democratic hegemony before its actual onset.
But why did not Sisi utilise this revolutionary situation and momentum to construct an alternative, if authoritarian, hegemony? Two restrictions are underlined by Holmes: one political and the other economic. At the political level, the coup against the widely popular and globally celebrated democratisation project required an institutional and international backup that could only be achieved by appeasing the financial interests of the military and the international capitalists. This appeasement was conditioned on the repression of the industrial uprisings and the systematic oppression of working-class demands. At the economic level, the massive economic losses encountered in the period of persistent industrial contentions made it necessary for the regime to resort to international donors again, further enhancing the cycle of financialisation and the crisis of hegemony to which it gave rise.
For these two reasons, Holmes expounds, the Sisi regime was required to maintain unaltered the social cleavages that it was popularly delegated to address. And it is because of that that the once-popular regime steadily lost the social base that supported its rise to power, forcing it to return to the ‘damage control’ paradigm of governance based on force, rent distribution and sporadic subsidies. Therefore, Sisi’s ‘coup from below’, as Holmes articulately describes it, constituted the mirror opposite of Nasser’s revolution from above. The latter began as a de facto transitional regime but then used this opportunity to establish a relatively durable social hegemony. The former began with popular momentum, only to end up as an isolated regime reliant primarily on policies of damage control. Holmes’ emphasis on the class dynamics that conditioned the rise of Sisi elucidates his abrupt transition from a popular to an isolated regime.
Conclusion: a permanent state of transition
While ordinarily conceived as transitional, the micromanagement policy of ‘damage control’ was habituated in Egyptian politics to the extent that an alternative hegemony concluding this supposed transition was not brought forth even after two remarkable waves of major popular uprisings. Salem’s account sheds light on the dynamics of this habituation and its historical ruptures. While she highlighted many other ruptures, this review focused on the rupture that occurred in the aftermath of the Gulf War and its ensuing IMF assistance package and ERSAP, and the implications of this rupture on the rearrangement of inter-regime and regime–society relations. Holmes focuses on the later reinstallation of the micromanagement habit after the popular revolution against Mubarak, which was intuitively expected to reverse this habit and establish a democratic hegemony, and again after the collapse of the democratic regime and the rise of a popular military regime with initial hegemony strong enough to defeat the revolutionary and Islamist forces that overthrew and replaced Mubarak. In both cases, she has shown, the extended wealth and power of the financial class, the international financial donors and the military financial conglomerates impeded the articulation of any hegemony, democratic or populist, that incorporates the working class and its industrial demands. The military was thus given the floor to take over, reinstall the habituated micromanagement regime, and situate itself more firmly at its centre. Combined, the two books provide an analytic history of the rise, brief challenge and prompt reinstalment of the authoritarian neoliberal regime that lacks hegemony but remains strikingly resilient.
There is much more to Salem’s and Holmes’ monographs than can be encapsulated in a brief review. In this review, I focused on one particular aspect: how they further our understanding of the failure of a revolutionary situation that forcefully overthrew a long-ruling tyrant and successfully installed a brief, yet nationally unprecedented, democratic order to move beyond the crisis of hegemony that gave rise to it. The two books address different epochs and research questions, but they both hint at the financial class and culture as the main reasons for, on the one hand, the regime’s inability to articulate hegemony and, on the other, its ability to sustain itself nonetheless. Their emphasis on the financial politics not only elucidates the rise and fall of the revolutionary uprisings in Egypt, but more broadly explains the conceptual possibility of the longue durée resilience of regimes that lack political hegemony.