Egypt military official defends army's economic interests

Niveen Wahish, Wednesday 28 Mar 2012

Military's economic self-sufficiency is essential to Egypt's well-being and has saved the country from insolvency and shortages, claims the army's financial affairs chief

Election line
Securing 2011's parliamentary elections cost the army LE180 million, says SCAF (Photo: Reuters)

Egypt's ruling military has painted a bleak picture of the country's economy but defended its own spending and financial interests, saying it only receives minimal funding from state coffers.

Speaking on Tuesday, a representative from the Supreme Council of the Armed Forces (SCAF) said military spending makes up just 5 per cent of the government's budget, less than half the proportion in other countries, with the army covering the rest of its expenditures itself. 
 
Egypt's government spends twice as much on education as on the military, he said. 
 
The numbers -- which have never been disclosed before -- were unveiled by Major General Mahmoud Nasr, Assistant Minister of Defence for Financial Affairs, during a meeting with members of the media and Egyptian analysts.
 
The amount received from the government, Nasr said, is the minimum the army needs to cover wages, supplies and maintenance of equipment. If the army's real financial needs were borne by the government then spending in other vital areas would be seriously affected, he added.
 
Nasr also defended the military's wide-ranging economic activities, saying they not only made it financially self-sufficient but allowed it to maintain a six-month strategic stock of basic commodities in case of any crisis.
 
They also enable the army to assist the government when needed, he added. In the past year the army have boosted Egypt's tumbling foreign reserves with $1 billion from their own reserves.
 
This sum, Nasr said, came from money earned by the military in helping clear anti-personnel mines in Kuwait and conducting peace-keeping operations with the United Nations.
 
The army has also provided the government with around LE12 billion in loans, Nasr added, with the funding used for various projects, from rebuilding police stations after the revolution to building roads and assisting cash-strapped governorates. 
 
"Securing the parliamentary elections alone cost some LE180 million," Nasr said.
 
He added that Egyptians have not seen any shortages in basic commodities under SCAF rule thanks to the army's financial support.
 
Nasr also credited the military with creating economic activity in remote parts of Egypt where other investors are loath to tread, setting up infrastructure for others to follow.
 
He gave the example of an agricultural project in El Owaynat in the Western Desert, which aims to help Egypt achieve self-sufficiency in food production.
 
Given the scale and long-term goals of such projects, Nasr said, it was unacceptable for the army to handle the management of these military-civilian projects to the government. The economic activity of the military also serves civilians, he explained, adding that they pay taxes and are supervised by the Central Auditing Agency.
 
"The armed forces will fight to defend our projects. We have been building them for 33 years and we won't give them to anyone else to destroy," said Nasr.
 
Nasr also gave a bleak overview of the Egyptian economy. The country's growth rate will not climb above 2 per cent, either this fiscal year or the next, he explained.
 
"All we can hope for now is to insure food and drink and security," said Nasr. He added that an economic recovery would not happen until six months to a year after the election of Egypt's first post-Mubarak president.
 
Nasr also accused the government of mismanagement, saying the Ministry of Planning had proven itself weak. In addition, government officails had failed to specify priorities for expenditure.
 
In December, Nasr predicted Egypt's foreign reserves would plunge to such a low by early 2012 that the country would only have enough funds for two months of imports.
 
In May 2011, he said Egypt faced bankruptcy and a "revolution of hunger" due to continual protests. 
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