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Below is an article translated from the Egyptian newspaper Al-Ahram regarding the Egyptian military economy. Care was taken to ensure the translation retains as much of the original meaning as possible.

What does the West mean by the “army’s economy”?

Source: Al-Ahram daily

8 October 2013

By: Ahmed El Sayed Al-Naggar

The West has resumed its negative campaign against the “economy” of the Egyptian Army, supported by lies and myths the misinformed in Egypt are happy to regurgitate. The resurgence of this miserable melody by a military march of hungry vultures, is trying to tear down the last large, powerful and cohesive Arab army in the Middle East surrounding Palestine. Having obliterated the Iraqi army and successfully weakening the Syrian Army as it fights a fierce war against the band of terrorists, gathered and imported from across the world by virtue of regional and international powers to destroy and divide Syria on ethnic and religious lines, the military upper hand lies in favour of Israeli interests.

This campaign has been renewed due to the role of the army in responding to the demands of the Egyptian people, revolting in the most unprecedented revolutionary movement in the history of the world on 30 June to complete its great 25th January revolution, which was about to be betrayed at the hands of the Muslim Brotherhood. The Egyptian people demanded the removal of the President who had hijacked legislative powers, the constitution and assailed judicial authorities and liberties to which his regime committed the atrocities of torture and murder, as well as destroying the state economically and socially. In this context, some of the major Western newspapers have continuously reported “information” that the army accounts for 40% of the Egyptian economy. This statement is completely laughable and devoid of truth, resembling the misinformed, unscientific allegations previously made by ignorant and irresponsible enemies of Egypt, now repeated by both foreign and local parrots alike.

According to official data accredited to international institutions, the private sector’s contribution to GDP amounted to 61.8% in 2011/2012 and the remaining 38.2% is contributed by the state from both its civil and military sectors. General oil and gas revenues provide 14.5% of the GDP as part of the civil sector in addition to 10% from government (public) revenue. A 2.5% output from the financial sector and public general insurance is combined with the 1.9% contribution from Suez Canal revenues which qualifies as civil sector output. This remainder also includes roughly 3.3% of GDP from social insurance, 2% from manufacturing industries – generally assuming that only half of this (1%) is a civil output, about 1.5% for electricity, water and sanitation and 0.9% in is contributed by the telecom sector/general information and 0.8% output can be attributed to transport and general storage.

I have entirely ruled out health from the civil sectors and public sector contribution in the fields of construction and real estate activities – thus calculating the output as part of the military sector, even though it is just a partner in the process. The final result can be calculated as follows; the private sector output is about 61.8% of GDP, and the civil public sector contributes around 36.4%. The remainder, of about 1.8% output is the army’s largest possible “share” of GDP.

Anyone who would like to re-examine this matter whether at home or abroad, must consider the facts and should refer to data from the World Bank or official (government) data instead of fabricating myths contending that the army controls 40% of the economy.  It must also be noted that civil companies controlled by the army were established after the liberalisation of commodity prices and the privatization of the public sector, which was supplying the army with the food and materials necessary to ensure basic provisions, not for the purpose of profit creation. Bearing in mind that any change should be piecemeal and such companies should be under army jurisdiction without alteration to their status – unless under consultation of the Supreme Council of the Armed Forces (SCAF).

This ensures that essential supplies from state-owned companies in all sectors are moderately priced and with respect to their non-military civil areas, are subject to tax regimes and general public oversight. In all cases, financial transactions pertaining the military budget and companies controlled by the army are subject to the oversight of a special committee established for this purpose by members of the House of Representatives, heads of regulatory institutions and the General Intelligence Services.

It must be noted that, not unreasonably, national service projects carried out by Ministry of Defence are exempt from tax by law. So long as companies perform any non-military activities, they should be subject to a tax regime in order to provide fairness in business markets. The workforce in these companies are mostly recruits from the National Service sector and should also be subject to the wage system employed in the civil sector to ensure fair competition in the business market. Generally speaking, this wage system should be applied to all recruits undertaking National Service in order to preserve their integrity, humanity and deepen the sense of national belonging.

This requires an adjustment to defense appropriations in the state budget because it is among the lowest in the world, in light of data published by international financial institutions, which the Western media machine has deceitfully ignored. The World Bank report on global development indicators states Egypt’s military expenditure amounts to about 2% of GDP (World Development Indicators 2012, p. 308 – 310).  Presently, the current global average ‘military economy’ rate is around 2.6% and about 6.5% in Israel (previously reaching the record level of a fifth of the GDP), about 4.8% in the USA, and 4% in Russia. The average in the Arab countries is around 10.5% in Saudi Arabia, 9.6% in Amman, 6% in Iraq, 5.4% in the UAE, 5.2% in Jordan, 3.9% in Syria, and 3.5% in both Morocco and Algeria.

Accordingly, Egypt spends among the lowest amounts globally and regionally in military expenditure and as a regional leader, must increase spending to at least gain a strategic balance with its belligerent neighbour that persistently acts with injustice and aggression. All this requires funding and development to basic military infrastructure and the manufacture/purchase of advanced arms from a variety of sources. The provision of decent and fair wages to the soldiers of the armed forces up to the Supreme Command is also needed accompanied by a rejection of the suspicious and poisonous US aid. This financial hand-out is a potential breach to national security and is currently maintaining Egypt’s substandard position to Israel’s military superiority over Arab nations.

Translation; Omar Abdellatif. Proofread by Mostafa Al Ansary

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