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Sisinomics at a Crossroads: Egypt on the Brink of Collapse

Al Fusaic

By Ruhama Bekele

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INTRO

In September 2024, the Biden administration renewed $1.3 billion in military aid to Egypt, despite the country's ongoing human rights abuses and widespread corruption. These issues violate U.S. laws such as the Leahy Law, the Foreign Assistance Act, and the Arms Export Control Act, as well as the administration’s anti-corruption agenda. This presentation will explore Egypt’s political economy, corruption, and human rights violations, while analyzing the reasons behind the U.S.'s continued military aid.

Sisi’s Regime

In 2013, Egypt's Minister of Defense, Abdel Fattah el-Sisi, seized power through a violent coup that ousted the democratically-elected president, Mohammed Morsi, who was affiliated with the Muslim Brotherhood. To solidify his control, Sisi ordered the killing of hundreds of protesters, effectively bringing an end to Egypt’s brief democratic experiment.

Sisi’s Political Economy

  • State-led infrastructure

    • Emulating the Gulf states' economic model, Sisi aimed to boost Egypt's economy and attract foreign investment through massive infrastructure projects like the New Administrative Capital (NAC) announced in 2015 However, unlike the Gulf states, Egypt lacks the oil revenue needed to sustain these ambitious initiatives.

  • Foreign Aid

    1. Initially, Gulf states, primarily Saudi Arabia and the UAE, poured significant funds into stabilizing Sisi's regime, driven by their shared opposition to the Muslim Brotherhood. However, once Sisi’s grip on power was secure, Gulf aid dried up, forcing Egypt to seek alternative sources of investment.

Won’t Cost a Penny

After multiple unsuccessful attempts to secure Chinese funding, Sisi assured investors and the public that Egypt would "self-finance" the New Administrative Capital (NAC) without "costing the state a penny." This marked the beginning of Egypt’s "Sisinomics" model, where military generals were awarded lucrative contracts through the Administrative Capital Urban Development (ACUD) company, which was controlled by the Ministries of Defense and Housing.

Sisi claimed that the NAC would be funded through land sales managed by the ACUD. To facilitate this, land was transferred from the state and private landowners to the ACUD through presidential decrees, which labeled its operations as "a work of public interest", allowing the state to seize and transfer the land. The ACUD would then set arbitrary prices and sell the land to public and private sector investors. Military generals and regime-connected firms, however, secured the largest and most lucrative deals, while outsiders were excluded from these non-competitive contracts.

Debt and Patronage

In 2023, Egypt's GDP-to-debt ratio surged from 81% in 2014 to 96%, with 47.4% of the FY 2024/2025 budget now allocated to debt servicing, limiting funds for healthcare and education. As subsidy cuts raised the cost of essentials like food and electricity, Sisi, facing public discontent, compared himself to Mao Zedong, urging Egyptians to endure the hardships in pursuit of his vision for a modernized Egypt.

While Egypt's infrastructure projects have deepened the country's debt, military generals who own the ACUD have profited billions. The lack of transparency and accountability mechanisms has enabled the military to quietly benefit, reinforcing a patronage network that supports Sisi's rule. These projects serve more as political tools to consolidate Sisi’s control than economic ventures, as they consistently fail to meet benchmarks due to non-competitive contracts.

Human Rights

Since seizing power in 2013, Sisi's regime has consistently violated human rights, targeting protestors, activists, journalists, and political opponents to suppress civil society. In 2015, Egypt's National Council for Human Rights reported “right to life witnessed horrible deterioration” while the U.S. State Department highlighted restrictions on free expression, assembly, and press. Civil society has since been suffocated and powerless to face corruption and record-high inflation, with Sisi securing a third term in 2023 with 89.6% of the vote, reinforcing his control over the state, including its elections.

Foreign Aid

Despite Egypt's human rights abuses, the U.S. and EU have provided billions in aid to prevent the country from collapsing, fearing regional destabilization and refugees from Africa’s third largest population. Concerns are heightened by the Russia-Ukraine war, which has disrupted wheat supply lines on which 72 million Egyptians depend, making stability a priority over human rights.

Another key geopolitical factor influencing U.S. decisions is Egypt's regional role. Despite the strain in Egypt's relationship with Israel due to the Gaza War, Egypt continues to be a dependable security partner for Israel. Additionally, for European aid, Egypt intercepts and detains migrants attempting to cross the Mediterranean to reach Europe.

Egypt’s Future 

As seen, Sisi’s regime has essentially taken Egypt’s population hostage as Egyptians have not only been stripped of their civil and political rights but also starved as a function of inflation and subsidy cuts. In subjecting Egyptians to these conditions, Sisi has strengthened his patronage networks and his geopolitical leverage over the Americans and Europeans. The Gaza War has further increased his leverage while simultaneously distracting the public, both domestic and international, from his regime’s human rights abuses. However, Sisinomics is not sustainable and will hollow out the state’s resources until Egypt collapses or Sisi is toppled. As such, Egypt’s future remains bleak as corruption continues to poison every facet of life in the country, ultimately jeopardizing stability and progress for the Egyptian people.

Sources