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Sisi the reformer?
Egypt Slashes Energy Subsidies

There are two kinds of military dictatorships. Both are brutal and arbitrary. One kind uses its huge coercive power however harshly to ram through important decisions that the politicians should have done but couldn’t or wouldn’t. The other kind just holds power without doing anything to address a country’s deep needs.

The first kind—think Pinochet, Ataturk, Franco and a few others—by and large leave their country in better shape in some important respects. The other kind—think of coups in much of Africa, Argentina and Greece—don’t have anything positive to balance out their crimes. We know the Egyptian coup was violent and its human rights crackdown both tragic and ugly. Now the question is whether the Sisi government will use its ill-gotten power for any good purpose, or will the generals and the crony capitalist elite simply settle down in peace to consume the wealth of the country they rule.

Though the human rights situation remains grim, on that front at least there is some encouraging news. Sisi’s government is looking to slash energy subsidies by around $6 billion in this year’s budget. The Financial Times:

Successive Egyptian administrations have balked at increasing energy prices to consumers for fear of provoking a backlash in a country with high poverty levels and a moribund economy. Budgeted cuts last year were not implemented.

If applied this time, the subsidy bill would account for around 13 per cent of government spending, down from more than 20 per cent in recent years.

But [Egypt’s finance minister Hany] Kadri said Egypt could no longer afford to continue to defer reforms and would have to squeeze through “a bottleneck” for the economy to reach “the point of take-off”.

Abdel Fattah al-Sisi, the president, on Sunday approved the new budget, which aims to cut the deficit to 10 per cent. Last week he rejected an earlier version based on a 12 per cent shortfall, saying he did not want to leave future generations with soaring debts.

This is the biggest gamble yet for the Egyptian military republic. Cutting energy subsidies and therefore raising prices for everybody who uses energy has been a red line for every Egyptian government for decades. Cutting the subsidies is the single most important reform out a whole host of politically toxic but necessary changes the country has to make.

No doubt pressure from their gulf patrons—not even the gulf petro-states can afford to dump endless buckets of cash into the black hole of egypt’s bottomless coffers—played a role, but whatever the motive, this is a bold and constructive start. One reform won’t fix a broken economy or cure the ills of a deeply dysfunctional society, but if the generals and their allies now ruling Egypt can make real progress toward a sustainable economy, history will do more than dismiss them as a pack of thieves.

The world cannot thank them for ousting a legally elected government, however ineffective and destabilizing it was, but the world needs a stable and prosperous Egypt. If the generals can deliver—and the odds are against them—both Egypt and the world will be better off.

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  • Andrew Allison

    There are many kinds of military dictatorship (, and not all of them are brutal and arbitrary. The Pinochet and Franco regimes were extremely brutal and it’s debatable whether the societal gains were worth the cost. Ataturk was a former army officer who founded the Turkish Republic.
    If, despite the odds, the generals can deliver, the world can and should thank them for ousting an ineffective and destabilizing government..

  • FriendlyGoat

    —–and the odds are against them——-

    Yeah, admitting that the first goal of the new president is to increase consumers’ energy costs is gonna sell very poorly in Egypt at this time.

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