Egypt: The Sisi phenomenon

EIU: Egypt is due to witness its second presidential election since 2011, after three years of turmoil that has left most of its population of 85m people exhausted by economic hardship. The Presidential Election Commission will open the door for nominations by February 18th, paving the way for the head of the army, Field Marshal Abdel Fattah el‑Sisi, to put forward his candidacy. His popularity reached new heights when the military threw its weight behind the popular protests demanding the resignation of the Islamist president, Mohammed Morsi, in July 2013. But a plethora of challenges await Field Marshal Sisi once he gains office.

A number of potential candidates, such as the former chief of staff, Sami Anan, have expressed their desire to contest the election. The deposed Muslim Brotherhood will certainly announce an official boycott of the remaining stages of the rocky transition to democratic rule, but supporters of the group may have a case for electoral participation if a candidate deemed Islamist-friendly enters the race.

Public hype

Although Field Marshal Sisi is currently vested with the highest authority in the country, he would gain greater legitimacy, locally and internationally, as an elected leader of Egypt. Since the removal of Mr Morsi in July 2013, Field Marshal Sisi has emerged as a “hero” for stemming fears that mounting resistance to the Muslim Brotherhood could spiral into civil in‑fighting.

But not all Egyptians were keen to see the army reassert its dominant role in domestic politics. Field Marshal Sisi has yet to reveal a plan to end the current state of polarisation and demonstrate the flexibility to climb down from his current hardline stance against the government’s critics. Nevertheless, he will benefit from emerging splits among his opponents, and is certain to win the presidency, provided no other obvious rival contests the post. The Tamarrod (Rebel) movement that spearheaded a signature-collecting campaign to oust Mr Morsi is divided over whether to endorse Field Marshal Sisi as a candidate, with many opting to support Hamdeen Sabahi, a Nasserist politician, who recently announced his intention to run for the highest political office. With the exception of some Islamist forces, most of Egypt’s political parties are relatively recently creations and lack the necessary grassroots presence to fight a presidential election. The opposition movement may therefore set its sights on the next parliamentary vote to subject the coming leadership to scrutiny.

“S” for subsidies

Owing to his wide base of support, Field Marshal Sisi may see an opportunity to advance urgently needed structural reforms. In an audio leak broadcast by al‑Jazeera—the authenticity of which The Economist Intelligence Unit cannot confirm—he was allegedly heard saying that he would lift subsidies, which currently consume one-quarter of government spending. Successive governments since February 2011 have shied away from removing food and energy subsidies, the latter of which ballooned to a whopping E£100bn (US$14bn) in the 2013/14 budget from E£40bn in fiscal year 2005/06 (July‑June).

The interim government under the prime minister, Hazem el‑Beblawi, has already taken steps to phase out subsidies. Recent data published by the Ministry of Finance showed that fuel subsidies had declined from E£120bn in 2012/13 to just E£24.9bn in the first half (July‑December) of 2013/14, marking a 60% reduction on a year‑on‑year basis. This came largely on the back of generous Gulf support, which included fuel donations, and a likely delay in reporting subsidy outlays. Payments for food subsidies came to E£11bn, or 36% of the full‑year amount allocated to foodstuffs and other commodities. However, the Gulf Arab largesse that has accommodated Egypt’s expansionary fiscal policy is not indefinite, and it will take a head of state with a strong public mandate to consolidate the fiscal reforms that have begun under Mr Beblawi.

Graph shows fuel subsides shrinking by 60% in the first half of fiscal year 2013/14

Equally pressing is the need to curb rising unemployment, particularly among the young. Official statistics for the third quarter of 2013 show a 13.4% unemployment rate. We forecast that economic growth will average 3.4% in 2014‑16, a far cry from the 6‑7% required to absorb the 500,000 or so new entrants to the labour market every year. As a result, the risk of renewed social unrest cannot be discounted in the early years of Mr Sisi’s presidency.

International relations

Egypt’s current foreign policy, which has so far sought to expand its web of alliances with non‑traditional allies, would continue under Field Marshal Sisi in the medium term. This points to closer ties with emerging markets, such as Russia, China and India. Greater economic co‑operation with these markets could counter any shortfall in Western support.

Mending the rift with Western governments will prove trickier. Provided the election is deemed fair by international monitors, Field Marshal Sisi is likely to be recognised as a democratically elected leader, but progress on human rights will remain the focal point in future negotiations for financial assistance over and above the annual assistance provided by the US. His election would also be welcomed by many Gulf monarchies, chiefly those in Saudi Arabia and the UAE, which are especially antagonistic to the Muslim Brotherhood. Most Gulf states, with the notable exception of Qatar, are keen to boost security co‑operation with Egypt to contain the rising influence of Islamist movements across in the region.

Sisi’s presidential run is not without risks

Nevertheless, Field Marshal Sisi’s participation in the presidential race is not without risks. His ability to achieve a swift economic turnaround remains untested, and public support for him could easily evaporate if he fails to meet popular expectations of a return to economic and political stability in the country. His failure as president from a military background would also risk bringing the public into direct collision with the army, as happened under the 16‑month rule of the Supreme Council of Armed Forces following the ouster of Hosni Mubarak. Despite the return of the security apparatus since the overthrow of Mr Morsi, the police remain hamstrung by obsolete crowd-control methods to contain public unrest and seem ill‑equipped to combat the growing phenomenon of terrorism in Egypt.

Adding to the complexity of politics in Egypt, the coming parliament is likely to see a greater representation of youth figures who spearheaded the January 25th 2011 protests, many of whom are hostile to the return of military rulers and will certainly place Field Marshal Sisi under close scrutiny, even if he becomes president. He could therefore face an even tougher time than Mr Morsi in attempting to restore stability to the country.