by Ferdinand Eibl
When businessmen turned out to be the big winners in the 23 April elections of committee heads in Egypt’s freshly minted parliament, I was struck by a strong sense of déjà vu. Once more politics under Sisi looks like an updated version of the late Mubarak period minus an established ruling party. To recall, politically connected entrepreneurs like Ahmed Ezz or Mohamed Abou El-Enein had been dominant players in the last two parliaments under Mubarak, tweaking laws in their favour and undercutting market competition, as shown by the infamous monopoly law. Frequently, they headed committees that were closely related to their business activities, as in the case of construction magnate Tarek Talaat Moustapha who presided over the housing committee. The ensuing conflict between private and public interests was all too often resolved in favour of the former.
Now, as politically connected entrepreneurs again take up committee posts closely related to their businesses, it remains to be seen how the newly elected committee heads will resolve the conflict of interest this time. As head of the health committee and part of the Bassily clan – one of Egypt’s leading business families in the production and wholesale of pharmaceuticals – Elia Tharwat Bassily will have to make sure that the committee’s policy recommendations do not only serve the family business or the health industry at large, whose main business association is incidentally headed by his father, Tharwat Bassily. Sahar Talaat Moustapha, member of the Talaat Moustapha real estate empire, will be up to an equally challenging task as she takes over the leadership of the tourism and civil aviation committee, bearing in mind that a major chunk of construction activity happens in the tourism industry and that Talaat Mustapha clan took over the chairmanship of the Kempinski Nile Hotel group in 2010.
The big winner, however, is the El Sewedy family with two family members elected as heads of the strategically important industrial (Mohamed El Elsewedy), and energy and environment (Talaat El Sewedy) committees. Being one of Egypt’s biggest cable manufacturers and current head of the Union of Egyptian Industries, Mohamed El Sewedy is not only a highly successful entrepreneur but also one of the country’s chief lobbyists. The fact that he called for a 35% reduction of the gas price for manufacturers only shortly after his election as committee head, gives a first impression of how he might interpret his role as committee head, lobbyist, and businessman. It might also be no surprise that a number of his companies operate in energy-intensive industries.
Now, where is problem? After all, these individuals have, over time, acquired a considerable amount of business knowledge that they are going to put at the service of their committees. While this sounds good in theory, in practice, it has been shown that most successful economic policies for society at large are written in consultation with businesses, but not by businesses themselves. Whether it’s Evans’ ‘embedded autonomy’ or the European forms of corporatism, all successful models of state-business relations crucially rely on some degree of political independence from particular interests. Besides, a World Bank study has shown that sectors in which politically connected entrepreneurs are active have weaker job creation, soak up most loans, and have fewer SMEs. In my own research, I find that they also have much higher trade protection. Those whose interests would be vital to resolve endemic unemployment – small- and medium-sized enterprises – are barely represented as the ‘big guys’ yet again take control.
Finally, the recent election of committee heads also teaches us something about the persistence of de-facto power and those endowed with it: political elites. As the political field in Egypt reorganises itself, one realises how little elite turnover there has been. The Sewedy family used to be represented in the business secretariat of the former ruling National Democratic Party; Tharwat Bassily was a Mubarak nominee in the Shura council; and the Talaat Moustapha family has had a ‘political antenna’ in parliament since 2000. The point here is not about individual clans as such, as other examples could be easily adduced. The point is about the striking lack of elite rotation after a massive popular uprising, the aim of which was precisely to break up networks of privilege and create a more equitable economic model.
Dr Ferdinand Eibl is Research Officer at the LSE Middle East Centre, currently working in a research project entitled ‘The comparative political economy of the MENA region’. Led by Steffen Hertog, the project aims to place MENA-specific political economy issues in a wider comparative perspective. In his research, Ferdinand focuses specifically on the areas of distributive politics, social policies, and crony capitalism in the Middle East and North Africa.