The Egyptian Military’s Incentives

Alex Tabarrok points out that the Egyptian military “is an oligarchy which controls huge swaths of the Egyptian economy.”* He quotes the San Francisco Chronicle reporting that:

It owns companies that sell everything from fire extinguishers and medical equipment to laptops, televisions, sewing machines, refrigerators, pots and pans, butane gas bottles, bottled water and olive oil.

Its holdings include vast tracts of land, including the Sharm el-Sheikh resort, where ex-President Hosni Mubarak now resides in one of his seaside palaces. Bread from its bakeries has helped head off food riots.

and Time:

The revenue streams from its various holdings help the military maintain the lifestyle its officers have grown accustomed to, including an extensive network of luxurious social clubs as well as comfortable retirements — all of which helps ensure officer loyalty.

Remember that a substantial driving force in the Egyptian protests was economic dissatisfaction, and now that Mubarak has been ousted there’s been a partial shift in the protests from demanding political reform to demanding immediate improvements in pay and standards of living. But the Egyptian military–at least its officer corps–loses from economic liberalization.

Admittedly, as D.C. Sessions notes, the troops aren’t necessarily particularly loyal to the officer corps (is that a general problem in conscript armies?), so military leaders’ options may be limited. But it’s not clear just how limited, or how they view those limitations, and how they weigh their understanding of those limitations against their really substantial economic incentives.

________________________________________________________________
*They’re not, of course, unique in that. The armies of the PRC and Syria are also economic oligarchs, and often not just in legitimate enterprises but in gray or black market ones as well. Those are the ones I happen to know about, and I have no reason to think they constitute the complete list.

Advertisements

About J@m3z Aitch

J@m3z Aitch is a two-bit college professor who'd rather be canoeing.
This entry was posted in Perverse Incentives. Bookmark the permalink.

2 Responses to The Egyptian Military’s Incentives

  1. Matty says:

    I understand that the US military gives Egypt quite a lot of money and other support. How does that factor in as an incentive, does it provide a means to counteract what you describe here or are the gains too separate from individual officers pockets to make a difference?

  2. James Hanley says:

    Matty,

    I think it’s possible the U.S. military might be a most critical behind-the-scenes player in this game. The question is, what are its incentives?

Comments are closed.