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The Egyptian army seems to want to make spaghetti as much as it wants to fight wars

Tonand war It’s not going well. The enemy has made three major advances in less than a year. Morale is low. Abdel-Fattah el-Sisi needs to show leadership. His convoy traveled through a desolate landscape until it reached an army checkpoint where the Egyptian president was trying to muster troops. “Don’t think this crisis will last,” he told a crowd of conscripts in camouflage uniforms. “One day, this crisis will be history.”

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The tone and atmosphere is military. But in this case, the enemy is not rebels or invaders: it is the dollar, against which the Egyptian pound recently lost nearly half its value. Mr Sisi is not urging the military to fight harder, but exhorting them, and others among his 105 million subjects, to endure a dire economic crisis. It’s a strange scene that says a lot about his reign over the past decade.

His April 1 visit to the Sinai Peninsula, a vast lunar landscape inhabited by less than 1 percent of Egypt’s population, was also a declaration of victory. The region’s indigenous Bedouins have been marginalized for decades, denied decent work and forced off their land. Some took up arms after the 2011 overthrow of longtime dictator Hosni Mubarak. In 2014, they collaborated with Islamic State jihadists. The following year they briefly took over the coastal town of Sheikh Zuwaid (see map).

Local discontent has been fueled by the military’s efforts to quell the rebellion through a scorched-earth strategy. New York-based Human Rights Watch said it destroyed at least 12,000 structures and leveled 6,000 hectares of farmland between 2013-20. A quarter of North Sinai’s 450,000 people may have been displaced.

The turning point came only when local tribes joined the fight. After years of kidnapping, extortion and killing, they began fighting alongside the military to keep the Sinai peninsula safe. The area is calmer today, although militants claimed responsibility for an attack on a checkpoint in the city of Ismailia in December, their first attack on mainland Egypt in three years.

That was the background to Mr Sisi’s visit. Terrorism has all but been defeated in Egypt, he said. Soon there will be great celebrations and perhaps a museum honoring the sacrifices of the troops. “Terrorism,” Mr Sisi told his troops, “ends with you.”

Mr Sisi likes to invoke memories of Egypt’s post-revolutionary chaos and justify his autocratic rule. However, many of his subjects were working against him as the economy slumped. Egypt has had to devalue its currency by nearly 50% since March 2022 after investors pulled their money last year. The central bank has nearly doubled interest rates during this period, including the most recent hike of two percentage points (to 18.25%) on March 30.

Investors remain cautious. Sterling looks set to fall further: On the black market, the pound is trading around 16% below its official peg. Interest rates remain dwarfed by inflation, which hit an annualized rate of 32.7% last month. Food and beverage prices rose 62.9% year-on-year.

Investors have shown little interest in Egyptian debt due to negative real interest rates. On 3 April, the government sold just 1.1 million pounds ($35,275) of bonds at an auction, or just 0.04% of the 3 billion pounds worth of bonds sold: potential buyers want far higher rates than the government is willing to offer interest rate.

Government-to-government agreement worth $3 billion International Monetary Fund in December. Its commitment to the fund includes a pledge to shrink the military’s economic empire, which would crowd out private enterprise. Men in khakis make spaghetti and cement, build roads and bridges, and make television shows. Yezid Sayigh, a fellow at the Beirut think tank Carnegie Middle East Center, estimated in 2019 that the military oversees a quarter of public spending on housing and infrastructure.

Egypt has not kept its word. National Service Project Organization (National Plant Protection Organization), a military-owned company that is building new factories to make fertilizers, irrigation machinery and veterinary vaccines. An army-linked company recently won the contract to renovate the Cairo Zoo.

For two years, the government has been discussing selling stakes in bottled water company Safi and Wataniya, which runs petrol stations. Both are run by the military. Officials said this month they had received offers for each of them. Even this step, though, may not be as important as it seems. Visitors to Cairo in recent months may have noticed a growing number of Wataniya franchises rebranded as ChillOut stations, offering retail and fast food as well as petrol. Wataniya and ChillOut are both National Plant Protection Organization. The military appears to be divesting assets from a company that might be sold and transferring them to a company it will keep, which is presumably nothing International Monetary Fund remember.

Both Egyptian officers and foreign observers said the Sinai campaign had exposed real weaknesses within the army. Waves of well-trained conscripts were shipped to the front, sometimes without basic equipment; hundreds went home in coffins. A decade into Mr Sisi’s administration, the army is still grappling with its core mission of ensuring national security — even as it wages a widening campaign to seize control of the economy.

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