Egyptians Say Military Discourages an Open Economy

From this vast web of businesses, the military pays no taxes, employs conscripted labor, buys public land on favorable terms and discloses nothing to Parliament or the public.

Since the ouster last week of President Hosni Mubarak, of course, the military also runs the government. And some scholars, economists and business groups say it has already begun taking steps to protect the privileges of its gated economy, discouraging changes that some argue are crucial if Egypt is to emerge as a more stable, prosperous country.

“Protecting its businesses from scrutiny and accountability is a red line the military will draw,” said Robert Springborg, an expert on Egypt’s military at the Naval Postgraduate School. “And that means there can be no meaningful civilian oversight.”

Field Marshal Mohamed Hussein Tantawi, the minister of defense and military production who now leads the council of officers ruling Egypt, has been a strong advocate of government control of prices and production. He has consistently opposed steps to open up the economy, according to diplomatic cables made public by WikiLeaks.

And already there are signs that the military is purging from the cabinet and ruling party advocates of market-oriented economic changes, like selling off state-owned companies and reducing barriers to trade.

As the military began to take over, the government pushed out figures reviled for reaping excessive personal profits from the sell-off of public properties, most notably Mr. Mubarak’s younger son, Gamal, and his friend the steel magnate Ahmed Ezz. On Thursday, an Egyptian prosecutor ordered that Mr. Ezz be detained pending trial for corruption, along with two businessmen in the old cabinet — former Tourism Minister Zuhair Garana and former Housing Minister Ahmed el-Maghrabi — as well as former Interior Minister Habib el-Adli.

But the military-led government also struck at advocates of economic openness, including the former finance minister Youssef Boutros-Ghali, who was forced from his job, and the former trade minister Rachid Mohamed Rachid, whose assets were frozen under allegations of corruption. Both are highly regarded internationally and had not been previously accused of corruption.

“That mystified everybody,” said Hisham A. Fahmy, chief executive of the American Chamber of Commerce in Egypt.

In an interview, Mr. Rachid said he felt like a scapegoat. “People who have been supporting liberal reforms or an open economy are being caught up in the anticorruption campaign,” he said. “My case is one of them.”

“Now there are a lot of voices from the past talking about nationalization — ‘Why do we need a private sector?’ ” he added. He declined to talk specifically about the military but said that in general within the government, “some people have tried to say that the cause of the revolution was simply economic reform.”

Though some Western analysts have guessed that the military’s empire makes up as much as a third of Egypt’s economy, Mr. Rachid said it was in fact less than 10 percent. But economists say that because of its vested interests they still worry that the military will impede the continuation of the transition from the state-dominated economy established under President Gamal Abdel Nasser to a more open and efficient free market that advanced under Mr. Mubarak.

Moreover, the military’s power to guide policy is, at the moment, unchecked. The military has invited no civilian input into the transitional government, and it has enjoyed such a surge in prestige since it helped usher out Mr. Mubarak that almost no one in the opposition is criticizing it.

“We trust them,” said Walid Rachid, a member of the April 6 Youth Movement that helped set off the revolt. “Because of the army our revolution has become safe.”

Some of the young revolutionaries at the vanguard of the revolt identify themselves as leftists or socialists. And the idea of liberalizing the economy was thrown into disrepute because of the corrupt way that the Mubarak government carried out privatization, bestowing fortunes on a small circle around the ruling party while leaving most Egyptians struggling against grinding poverty and rampant inflation.