The hegemony of General Abd El Fattah El Sisi over affairs in post revolution Egypt raises an important question: Are military men good for the economy? Undoubtedly, this is a complex and sensitive question and it is rather difficult to find conclusive answer for it in one short article. Yet, it is essential to shed the light on other countries’ experiences and Egypt’s own experience in order to evaluate the economic performance of military dictatorships as to understand the possible scenarios awaiting Egypt under its military ruler.

Proponents of the military hegemony in Egypt and the constant undermining of the role of politics deem a strong military man in charge as healthy for economic take- off for a number of reasons. They believe military rule is superior to democracies in the expediency in which they can arrive to policies and implement laws that could resolve problems. They can easily calibrate the institutional and legal framework, since they don’t need a political coalition for passing or repealing acts. This framework can be efficiently managed, ignoring the special interests that need to be relatively reconciled in democracies, through a time consuming process. So a pro-development military establishment has greater capacity to modernize a society with a dictatorship than under a more democratic and civilian rule. It is noteworthy to clarify that I am not ruling out that civilian rule may result in dictatorships as we have seen in many countries around the world including Egypt under the Muslim Brotherhood.

However, I argue that the hegemony of military rulers is disadvantageous for the sustainability of economic progress for a number of reasons. When a military dictatorship makes a decision; be it efficient, effective, straightforward, or divine revelation, it has no mechanism to balance the consequences of the result. What happen is, even if the dictator makes one or two sound decisions, it will leave the possibilities for all the false decisions to come to have no room for accountability and checks and balances. The military culture is inherently different than the civilian one. The military by nature is a non-democratic institution by definition, which is acceptable in wars as there is no luxury of not obeying orders or prolonging the decision making process. The military backed regimes have also the power of arms to crush its opposition and monopolize its control over public affairs and the economy.

A system that relies on the wise choice of a single person or clique to represent the interest of the whole country is wishful thinking. That any development that appears as a result of those choices will have no safety net when the dictators makes a false decision during the early stage of development. Military dictatorships bring profit to dictators and its clique, but not to the citizens. Many studies show that countries under dictatorial rule or ruled by a military regime has better economy than countries where principles of accountability, public oversight over public affairs, independent judiciary and citizens’ empowerment are implemented.

Many empirical studies also proved that. But the essence of the development does not only end in the GDP numbers. Development has to consider the welfare of the citizens, to see whether the wealth of the country was also enjoyed by all of the citizens. The ability of citizens to have the means to defend their economic rights and are allowed to peacefully pressure for enhanced well-being, better living and working conditions through labour unions, civil society organizations and an open political system, is non existent under military rule. Checks and balances over military rulers also seem to be a big ask as international and Egyptian history demonstrate. Even if the military ruler grants some economic rights to citizens (an example would be the minimum and maximum wage in the Egyptian bureaucracy that will soon be implemented by Sisi’s government) is a top down approach that does not allow people to mount pressure on the executive for their economic rights (In Egypt, civil servants are still legally denied the right to unionize, and deprived of any legal means to negotiate with the state as their employer). Human development is not a main priority for military rulers as long as it does not coincide with their main objective that is maintaining power.

The system of governance must also ensure that freedom of citizens in itself is an end and a central objective of its policy. Unfortunately, this is not always the vision of military rulers who by their very nature heavily emphasize on stability without consideration to the importance of the freedom of citizens. Peoples’ freedoms and empowerment have intangible positive effects on the long-term well-being of economies through free thinking, innovation and self-correction mechanisms, which are absent under military junta.

One can draw numerous examples from history for the negative economic consequences of military rule. Those effects are usually summarized in two factors, one is the lack of attention to human development and rather more focus on infrastructure and rent-seeking activities and the other is the unsustainability of such systems, which tend to end in civil wars, assassinations. It could also just end by the death of the ruler and consequently the death of their economic project.

Building on the popularity of fascist ideas, Peron (a military man) turned Argentina into a corporatist country, with powerful organized interest groups—big business, labor unions, military, farmers—that negotiated with the state and with each other for position and resources. He nationalized large parts of the economy and put up trade barriers to defend them. He cut Argentina’s links to the world economy—which had been one of its great sources of wealth—embedded inflation in the society, and destroyed the foundations of sound economic growth.

Juan_Peron_con_banda_de_presidente

Another example would be the Soviet Union under Stalin, which recorded for decades high levels of growth and industrialization through forced labour and under extractive military rule led by Stalin. The illusion of Soviet economic success came to an end around the 1970’s, long after his death, but the legacy of Stalin and his brutal methods lived until the Soviet Union completely collapsed in 1990.

stalin

A good example for the unsustainability of the economic system under military rulers would be of Yugoslavia. A country that was lead by a communist dictator after the second world war, Josip Broz Tito, under his command Yugoslavia managed to rebuilt itself from the ashes of war only to find itself disintegrated, overwhelmed with civil war and ethnic cleansing after the death of their dictatorship leader.

In Egypt we have two major examples of military leaders, Mohamed Ali and Nasser, who illustrate the setback of military regimes of sustained economic progress. Both leaders had big economic projects exemplified in massive infrastructure projects and wave of industrialization. This was also accompanied with limited political freedoms or perhaps non-existent and with absolutely no constraints or checks and balances on the hegemony of the military ruler. Despite their initial success, their projects came to an end with their death. Few years after Ali’s death Egypt was occupied by Britain, whereas the Nasserist economic legacy died with his death and the last year of his rule Egyptian economy slowed down significantly and Sinai was occupied by Israel.

718px-ModernEgypt,_Muhammad_Ali_by_Auguste_Couder,_BAP_17996

Successive military coups in Pakistan have been justified in terms of economic incompetence and corruption of political administrations. There is growing consent that militarization of economic life is inefficient and crowds out private sector activity. There is no conclusive evidence to support the claim that military administrations are more competent in managing the economy or indeed less corrupt. There is evidence to suggest that they may invest less in social and physical infrastructure and that their term in office coincides with increased poverty and inequality and a more generalized deterioration of the human condition.

Some would argue that military rule can achieve enormous economic success as the case with South Korea. General Park Chung-hee is credited for successfully industrializing the Republic of Korea and establishing the base for its economic progress to high income country status and joining the rich country club of the OECD (Organization for Economic Cooperation and Development). It was not all rosy for the Asian giant.. South Korea experienced social struggles and political turmoil, which resulted in the death of General Park and the instability in the political and economic system continued until its democratization, which persevered the good economic practice of its predecessors. There is no significant relationship between military dictatorships and growth. In South Korea, which achieved significant growth rates under a military regime, doubled its GNP under a democratic, civilian rule.

There are many examples in history for military rulers such as Hitler, Mossolini and Pinochet of Chile, who despite their temporary success, left their countries in ruins through their brutal methods and intolerance of an open political system that values differences and allows for the empowerment of citizens. This is not to speak of military regimes in other poorer parts of the world such as Sub-Saharan Africa and the Arab world (Mubarak in Egypt, Hafez el Assad in Syria, Qaddafi in Libya …etc).

I argue here that in a country that lacks the institutional infrastructure to constrain rulers and taking into account the massive role the army plays in the Egyptian political and economic life poses a threat for the long-term ability of the economy to sustainably take-off. As can seen from Egypt’s current military ruler, there is a special focus on “national projects”, which are infrastructure projects essentially with vast amount of resources that will be poured in. Yet, the current military backed regime has not shown any clear commitment to issues related to human development, transparency, checks and balances and citizens empowerment but rather populist rhetoric that call for sacrifice for the betterment of the “state” and not the “citizen”.

Written by Egyptianomics

This page aims to raise awareness about key economic issues in Egypt. It endeavours to present new economic thinking and advocates human-oriented economics for Egypt

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