Egypt is seeing increasing tourist numbers as security improves. Who truly benefits from the rise of private security in Abdel Fattah el Sisi’s Egypt?
Who truly benefits from the rise of security in Abdel Fattah el Sisi’s Egypt?
Two years after the ousting of former President Morsi—who is currently incarcerated—President Sisi passed a new law permitting the establishment of private security companies by Egypt’s traditional elite – the Armed Forces and police.
While the decree came amidst rampant militancy in the North Sinai, general strife and restlessness across Egypt, the move is also Sisi’s answer to privatising security while keeping what should be a public benefit under his purview.
In this sense, private security protected him during his reelection campaign, and can provide strong support in the gradual return to a Mubarak-esque era of the security state and a powerful military.
Private or public, what's the difference?
Sisi is above all else a military man who considers himself a stabiliser of Egypt, not merely through administration but by centralising rule under himself.
From the depths of this messianic complex, he has firmly expressed that Egypt will be secure through him and him alone.
“I swear by God,” he states, “before anyone toys with your security … he has to get rid of me first....I am not a politician.”
Of course, the influence of military rule in the private sector is nothing new. Since his rise to power, there has been an increase in military ownership and control of Egyptian businesses. The Ministry of Military Production counts up to 20 firms directly linked to the Armed Forces.
Between 2018 and 2019, they predict a total profit from said firms nearly in excess of $836 million.
When defending the pervasive military encroachment into Egyptian industry, Sisi quotes the efficiency and discipline of the Armed Forces, stating, “It would take the private sector three to four years to complete executive procedures to do something this big, as with roads and water projects.”
The significance of this cannot be understated. Egypt boasts the largest army in the Arab world. According to some critics, the military controls over 40 percent of Egypt’s economy.
In 2016 for instance, the World Bank estimated Egypt’s GDP at $333 billion. The ramifications of Egypt’s far-reaching praetorianism will be far reaching and difficult to undo.
In exchange for their alleged efficiency, businesses run by military officials qualify for VAT exemptions and other sweeping incentives that give them unfair advantages over private businesses of any sector. Clients of military establishments hence enjoy lower prices.
As explained by Reuters in an investigation of Egypt’s military economy, receipts "for [even] a cup of coffee at private sector hotels, for example, add 14 percent VAT. Receipts at military-run hotels do not.”
In addition, loans for large-scale projects are quickly made available to military men. Major General Magdy Shawky Abdel Moneim explains, “[As] soon as I submit a request to the ministry and say I need 60 million or 40 million Egyptian pounds … the following day Major General Asar approves the request.”
The advantage of VAT exemptions and other related benefits such as generous loans, presidential backing and preferential treatment for contracts are also extended to security institutions at a time when Sisi is expanding security with partnerships in the commercial sector.
The outsourcing of security becomes both another military benefit and a means to expanding regime protection. This merger of regime security and privatisation is exemplified by Falcon Group International, a Cairo-based Egyptian security firm run by a former military intelligence officer.
Falcon was hired in October 2014 to guard up to 15 universities across the country. Within months they landed another contract: protecting the electoral compound of President Sisi ahead of his reelection.
Perched atop the shoulder of Egypt’s new pharaoh, the Falcon rises.
Ahmed Emam, Egyptian branch president of Swedish security firm Securitas observes with concern, “After [Sisi’s] election, Falcon suddenly and greatly expanded.”
The privatisation of security under Sisi seems to be stroking Falcon’s wings, one private security outfit amongst many. In the same year Sisi approved the creation of private security companies—under military and police tutelage—Falcon boasted at a press conference that it now held 54 percent of Egypt’s private security market.
When interviewed in 2016, Falcon CEO Sherif Khaled defended the expansion as a simple response to demand.
Private security needs, he explains, have always existed in response to market demands, rather than any contemporary political shift in the Middle East or other regions.
Khaled also insists that private security does not in any way take over national security but exists, as in Europe and the United States, to fill gaps that governments do not traditionally address, such as security arrangements for high-profile individuals, groups and common buildings that may be used by the public, such as banks and malls.
The private ownership of such buildings used by the public naturally means that there will be some cooperation between private security agents and the government. He claims, however, this is a global standard and not only an Egyptian trend.
Khaled’s defence of commercial security as an arrangement between public and private bodies downplays the relationship between Sisi and private security firms, which is highlighted by the extent to which Falcon has become involved in Egyptian media.
A personal fiefdom
In September 2017, Falcon Group launched a shell firm, Tawasol. It’s goal: completing the purchase of Al Hayat TV Network.
For nearly $79 million, a private security firm with connections to Sisi made the largest channel purchase in Egyptian media in recent years. The purchase was not without some irony.
Just as Sisi’s military comrades were ousting business owners from major sectors, Al Hayat was previously owned by businessman and politician El Sayed El Badawy, who announced and then quickly withdrew his candidacy in the 2018 elections, which Sisi won in a "landslide victory."
Now under the ownership of a private security firm, Al Hayat will become Sisi’s newest propaganda arm.
The privatisation of security under Sisi may restore a measure of touristic confidence. Yet the expansion of commercial security as a form of regime protection is nonetheless blurring the lines between private and public spheres even further.
Rather than legitimately outsourcing security to address gaps, Sisi is instead expanding control over private security solutions. While this may increase Egypt’s stability, it is aimed at giving him more political clout, and further entrenching loyalty and support towards his continued rule.
Mubarak himself would be impressed.
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