After the 1979 peace treaty with Israel, Sadat was able to divert a large portion of military production capacity to manufacturing goods for the civilian economy under the National Service Projects Organization (NSPO), which came to make washing machines, heaters, clothing, doors, stationery, pharmaceuticals, olive oil and shoe polish. Its food-security division developed a network of dairy farms, cattle feed lots and poultry and fish farms. Its first priority was to supply the ranks, with the excess sold in the private sector. The NSPO, like the military's budget -- including the $1.3 billion annual stipend provided by the U.S. -- is managed by the generals, with no oversight by a civilian authority.

Only Egyptians whose parents both hold university degrees can apply to the Egyptian Military Academy and other military colleges. Nasser, Sadat and Mubarak would not have met this requirement, since they all had fathers who were civil servants. Moreover, expensive private schools or private tutoring (PDF) are often required to pass stiff entrance exams at these colleges.

First under Anwar Sadat and then under Mubarak, Egypt turned away from the redistributive economics of Gamal Abdul Nasser and enthusiastically embraced Washington's market-oriented thinking, resulting in a deepening system of social inequality -- with the military both a central economic force and a gateway to Egypt's social elite.

The release from prison of former Egyptian president Hosni Mubarak at a moment when his democratically elected successor, Mohamed Morsi, is behind bars served up a sharp reminder that Egypt's military has restored the monopoly of power it has enjoyed since 1952. Whereas the Young Officers movement that overthrew the corrupt British-backed regime of King Farooq won popular support by promising to redistribute land from elites for the benefit of the poor, today's generals have a rather different economic agenda.

Although Mubarak was bound by the terms of International Monetary Fund loan agreements to undertake large-scale privatization of Egypt's public sector, this usually resulted in the creation of private-public partnerships in which the military owned shares. Eventually the military became involved in infrastructure, communications, shipping and arms-production projects in conjunction with Western corporations. Implementing these projects involved giving subcontracts to private firms, blurring the lines between military and civilian economies. In order to improve their chances of securing lucrative subcontracts, many private companies put retired or reserve military officers on their payroll.



The military's exact portion of the nation's GDP is a matter of conjecture, with estimates ranging from 5 percent to 40 percent. The armed forces' shareholdings in companies are classified as state secrets; disclosing them can lead to imprisonment.



The military's economic interests may have put it at odds with the presidency, particularly when it appeared that Mubarak was maneuvering to install his businessman son Gamal as president after Mubarak's retirement. Gamal Mubarak had been an aggressive advocate of privatization, and his ascension to the presidency would have broken the chain of military officers filling the post since 1952. Mubarak became president by dint of his status as a senior Air Force officer; the prospect of his civilian son taking over and threatening the generals' economic prerogatives may have been a key factor in persuading the generals to oust Mubarak during the popular uprising of February 2011.

Even though the Muslim Brotherhood's political party and its Islamist allies dominated the Constituent Assembly appointed by the democratically elected legislature, they did not dare tamper with the military's prerogatives. In its draft constitution finalized in late 2012, the assembly reconfigured the old National Defense Council (NDC) as a civilian-dominated National Security Council and a military-majority NDC, which, as before, retained the exclusive control of the military budget. It went further by specifying in the new constitution that the defense minister had to be a military officer. The draft constitution was passed in a referendum on Dec. 15, 2012.

Appeasing the generals did not stop the Supreme Council of the Armed Forces, headed by General Abdel Fattah el-Sisi, from ousting Morsi in a coup on July 3.



The generals' power grab appears to have had strong backing from Saudi Arabia, which was harshly critical of the Obama Administration for abandoning Mubarak in 2011. Riyadh and its partners in the UAE promised massive foreign aid to the administration installed by el-Sisi. Israel, meanwhile, also appeared to welcome the ouster of a Muslim Brotherhood–led government and the restoration of the military as the key source of power in Cairo. Israeli diplomats lobbied intensely in Washington for the U.S. to refrain from punishing the generals by withdrawing financial aid.

Although the coup against a government dominated by the Muslim Brotherhood may have supported a number of different regional strategic agendas, for the generals it may have also been a way of preserving their de facto veto power over civilian authority in Cairo -- and the attendant economic benefits.

Al Jazeera