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The Journal of North African Studies ISSN: 1362-9387 (Print) 1743-9345 (Online) Journal homepage: http://www.tandfonline.com/loi/fnas20 Egyptian coup of 2013: an ‘econometric’ analysis Andrey Korotayev, Leonid Issaev & Alisa Shishkina To cite this article: Andrey Korotayev, Leonid Issaev & Alisa Shishkina (2016) Egyptian coup of 2013: an ‘econometric’ analysis, The Journal of North African Studies, 21:3, 341-356, DOI: 10.1080/13629387.2015.1124238 To link to this article: http://dx.doi.org/10.1080/13629387.2015.1124238 Published online: 29 Dec 2015. Submit your article to this journal Article views: 89 View related articles View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=fnas20 Download by: [Higher School of Economics] Date: 08 June 2016, At: 12:01 THE JOURNAL OF NORTH AFRICAN STUDIES, 2016 VOL. 21, NO. 3, 341–356 http://dx.doi.org/10.1080/13629387.2015.1124238 Egyptian coup of 2013: an ‘econometric’ analysis Andrey Korotayev, Leonid Issaev and Alisa Shishkina Laboratory for Monitoring of Sociopolitical Destabilization Risks, National Research University Higher School of Economics, Moscow, Russia Downloaded by [Higher School of Economics] at 12:01 08 June 2016 ABSTRACT The article is devoted to an ‘econometric’ analysis of the events in Egypt that happened in summer 2013. The analysis of the Egyptian Stock Exchange indices suggests that the 2013 Egyptian coup d’état was prepared to a very considerable extent by the reconciliation between the Egyptian economic and military elites. It also suggests some additional hints regarding the split between the Arabian monarchies (Qatar, on the one hand, and Saudi Arabia, Kuwait and the United Arab Emirates on the other) that displayed itself during the Egyptian crisis. KEYWORDS Egypt; army; economic elites; stock exchange indices; 2013 Egyptian coup d’état On 3 July 2013 Egyptian Defense Minister Abdel Fattah el-Sisi in his address to the nation declared the removal of President Mohamed Morsi from his position and suspension of the December 2012 constitution. Thus, a short but unique period of ‘the Muslim Brotherhood’ reign came to its end. Mohamed Morsi during the first months of his reign faced the necessity of extremely unpopular policies to overcome a socioeconomic crisis in the country. A signal of its possible political consequences was the vote in the constitutional referendum in December 2012 when the support for the constitution (‘pushed through’ by the Islamists) was not as obvious as it was in the case, for example, of March 2011 (voting for the adoption of a temporary constitutional declaration) or in the parliamentary elections in December 2011–January 2012 (see Issaev 2013). It was obvious that to solve social and economic problems through popularisation of Islam and populist slogans is impossible, and this meant that the president would either have to withdraw from the policy of Islamisation, or to pursue such a policy and in this way all of the frustrations of not improving (even if not worsening) conditions of the population and unresolved social and economic problems would be firmly associated with the period of Islamists’ reign, which would dramatically affect their support by the citizens. Morsi was given just a year to implement CONTACT Andrey Korotayev © 2015 Taylor & Francis akorotayev@gmail.com Downloaded by [Higher School of Economics] at 12:01 08 June 2016 342 A. KOROTAYEV ET AL. the Egyptian ‘economic miracle’, and this did not leave the fifth Egyptian President chances to retain power. Note that if we observe the behaviour of the main Egyptian stock indexes, we can identify some extremely interesting patterns. What appears to be the most suggesting is that two days before the beginning of the protests against President Morsi, on 24 June 2013, the main Egyptian stock index EGX 30 began a steady rise (Figure 1), and for the period between that date and before the close of trading on 2 July 2013, that is, immediately prior to the overthrow of M. Moursi, it rose by more than 10% – from 4523.32 to 4986.81 points, while immediately after the coup, on 4 July, it grew to 5334.54 points (so that the overall increase in the period between 24 June and 4 July was really impressive – 18%). A similar trend was observed in the case of other Egyptian stock indexes. For instance, the Egyptian EGX 100 started growing since 23 June 2013 from the level of 613.69, and when the exchange was closed on the eve of the coup it had grown almost by 10% (to 671.26), and after the coup, on 4 July, it jumped to 728.91 (so that the overall increase in the period between 23 June and 4 July was about 19%) (Figure 2). The Egyptian EGX 70 also showed a rapid growth from 348.81 points on 23 June 2013 to 380.87 points by the close of trading on the eve of the coup, on 2 July 2013, and further jumped to 422.62 points immediately after the coup, on 4 July (Figure 3): This indicates that even before the overthrow of Morsi the Egyptian economic elite had rather reliable information about the forthcoming regime Figure 1. EGX 30 index dynamics (September 2012–September 2013). Source: http://www.bloomberg.com/quote/CASE:IND. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 343 Figure 2. EGX 100 index dynamics (10 June–5 September 2013). Source: http://www.egx.com.eg/english/homepage.aspx. change in the country in a very specific direction (but, as we shall see, not only about this), and that helped to encourage stock gamblers to ‘invest’ in shares of Egyptian companies. At this junction it appears reasonable to recollect the following points. The main losers in the events of January–February 2011 were representatives of the so-called Gamal Mubarak team – top businessmen of Egypt. The son of former Egyptian President actively promoted them to key positions in government (primarily through the Shura Council, the People’s Assembly and the Cabinet of Ministers) and the ruling National Democratic Party (NDP). Note that this was happening against the background of a rather sharp conflict between the economic and military elites of Egypt that developed very saliently prior to the 25th January Revolution. As is well known, the military elite controlled (and controls) not only the Egyptian Armed Forces, but also a major part of the Egyptian economy. And these are not only military factories, but also large pieces of land, various real estate, fuel stations, construction and transportation enterprises, as well as various factories that produce Figure 3. EGX 70 index dynamics (10 June–5 September 2013). Source: http://www.egx.com.eg/english/homepage.aspx. 344 A. KOROTAYEV ET AL. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 not only military production, but also things like TV sets, refrigerators, spaghettis, olive oil, shoe cream and so on.1 Estimates of the share of the Egyptian economy controlled by the military range between 10% and 40%2 (Roy 1992; Nepstad 2011, 489; Marshall and Stacher 2012; Tadros 2012). This group of the Egyptian elite was frightened by the ascent of the ‘young guard’ of the leading Egyptian businessmen (under the leadership of Gamal Mubarak) who controlled the economy block of the Egyptian government. Since 2004 this government had been implementing rather effective economic reforms that led to a significant acceleration of economic growth rates in Egypt (e.g. Korotayev and Zinkina 2011b; Malkov, Issaev, et al. 2013; Malkov, Korotaev, et al. 2013; Korotayev, Issaev, and Shishkina 2014). Over the past decades, the Egyptian military has not limited its focus to security matters; it has also acquired valuable real estate and numerous industries. By one estimate, the military commands up to 40 percent of the Egyptian economy. Before the events of 2011, Egyptian officers expressed concern about President Mubarak’s plan to appoint his son Gamal as his successor. If Gamal took office, many believed that he would implement privatization policies that would dismantle the military’s business holdings. (Nepstad 2011, 489; see also Roy 1992; Marshall and Stacher 2012; Tadros 2012) Indeed, there were all grounds to expect that in case of Gamal Mubarak’s coming to power the leading Egyptian businessmen from his circle will establish an effective control over the generals’ economic empire – and it would be rather easy to justify this, indicating (quite real) ineffectiveness of exploitation of the respective economic assets and the necessity to optimise it. Thus, this conflict was becoming ripe for a long time and was largely caused by the resentment by Egyptian generals to the possibility of Gamal Mubarak becoming a potential successor of Hosni Mubarak (see Issaev 2012). The Egyptian elite conflict allows to understand some events of the Egyptian Revolution that may look mysterious at first glance. For example, throughout the revolution the army guarded quite rigorously all the official buildings, effectively blocking all the attempts by the protesters to seize them. However, already on the first days of the Revolution (on 28 and 29 January 2011) the army let protestors seize, crash and burn the headquarters of the ruling party of Mubarak’s Egypt – the NDP. However, on closer inspection one will not find anything strange here – as the real head of this party was just Gamal Mubarak; thus, the military elite delivered a very strong blow upon its archenemy with the hands of the protestors (see e.g. Issaev and Shishkina 2012). Within the context of the still rather fashionable interpretation of the Egyptian events of January and February 2011 as a sort of ‘confrontation between revolutionary people masses and the repressive authoritarian regime’ one could hardly understand the apparently enigmatic (but extremely famous) ‘Battle of the Camel’, when there was an attempt to disperse the Tahrir protesters on the part of a motley crew of cameleers – workers of Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 345 tourist services operating in the Pyramids area and engaged in renting horses and camels to tourists; the cameleers attacked the protesters while riding camels and horses (which, incidentally, rendered a specific exotic colour to events of 2 February – and to the Egyptian 2011 Revolution, in general). However, if this was indeed ‘the confrontation of popular masses and the repressive authoritarian regime’, why was it necessary for the ‘authoritarian regime’ to employ such strange amateurish figures, and not to use such a simple thing as the professional repressive apparatus? The point is just that already on 2 February Tahrir protesters confronted not the professional repressive apparatus controlled by the ‘old guard’ (that took the position of friendly neutrality towards the protesters), but the economic elite clique that in order to counteract the protesters (who demanded the removal of the businessmen’s leader) had to employ semi-criminal elements rather than professional repressive apparatus (see El-Din 2011; Issaev and Shishkina 2012, 70–73; Issaev and Korotayev 2014 for more detail). Thus, already in early February 2011 the protesters in Tahrir were countered not by the repressive apparatus of the authoritarian state, but by a clique of the businessmen who were very rich indeed, but who did not control the repressive apparatus – which accounts for a very easy ‘victory of the revolutionary masses’ up to a very considerable extent. Subsequently, this led to a number of loud legal proceedings against individuals involved in the incident (El-Din 2011). As a result, many Egyptian businessmen associated with the NDP either left the country or were put behind bars; this was naturally accompanied by collapsing share prices, falling stock indexes, etc. The contrast with July’s ‘revolution’ of 2013 accompanied by a rather rapid growth of stock market indexes (rather than by their outright collapse) is, of course, very obvious. We should stress the fact that after the ‘Muslim Brotherhood’s’ victory in the parliamentary elections of 2011–2012, M. Moursi’s coming to power, the subsequent dissolution of the SCARF and dismissal of Defense Minister Mohammed Tantawi as well as the Army Chief of Staff Sami Adnan with subsequent changes in military ranks, the situation became alarming even for the Egyptian generals. Already by 2013, being one of the most powerful ‘businesses’ of the country, the Egyptian Army, (along with those major businessmen of ‘Gamal Mubarak’s team’ who had survived after the end of Mubarak’s rule) realised the need for joint confrontation with ‘Brothers’, which is confirmed by the dynamics of changes in the Egyptian stock indexes after Trades opening on 24 June 2013. It is possible to say with a high degree of probability that a few days before the start of protests against President M. Moursi the information arrived that the military elites intended seriously to end the rule of the Muslim Brother (and in the case of the Army’s success Egypt should expect already arranged massive financial subventions from Saudi Arabia and other financial players of Downloaded by [Higher School of Economics] at 12:01 08 June 2016 346 A. KOROTAYEV ET AL. the Gulf). In turn, the guarantees of foreign currency inflows into the country encouraged stock gamblers to invest in Egyptian stocks, and ensured the growth of stock market indices even before start of the coup. It is also important to note the following. In June 2013, just a few weeks before the coup Egypt started to experience shortages of gasoline and electricity. Several kilometre queues to the gas stations began to emerge on the streets of the country; fallahs increasingly lacked the capacity for irrigation, etc. (Ismail 2013). However, after the coup of 3 July 2013 the situation improved almost immediately, and that may also serve as an indirect confirmation of the fact that the interruptions of fuel and electricity supply in June were associated with direct sabotage of businessmen involved in the conspiracy. It also confirms the assumption of a high level of coordination and organisation between military and economic elites as regards those events that led to the overthrow of President M. Morsi. The fact that after the overthrow of M. Morsi it was Hazem Al Beblawi who took the post of prime minister supports this point of view, as well. Being a lawyer by education, he began his career as an adviser to the Minister of Finance of Kuwait in the 1970s, and 10 years before the events of the Arab Spring, he worked as an adviser to the Arab Monetary Fund in Dubai. It is possible that an agreement on granting subventions to Egypt through this organisation was largely his accomplishment, primarily in exchange for the post of prime minister. We should keep in mind that the appointment of Hazem Al Beblawi (who was very closely connected with the Gulf financial institutions) to a leading position in the government that was planned to be put in power after the coup seems to be one of the conditions for the guarantees of provision of several billion dollars to the new administration immediately after the ‘revolution’ in July. The dynamics of exchange rate of the Egyptian pound to the US dollar also seem to be rather interesting (see Figure 4): As one can see, in early 2013 the rate of the Egyptian pound against the US dollar plummeted: from 0.1557 dollars per pound on 4 January 2013 to 0.1489 dollars per pound on 1 February 2013. Then it fell much more slowly until the end of May – the beginning of June 2013, when the rate of pound to dollar was in a range from 0.1431 to 0.1429 dollars per pound. The situation began to deteriorate again starting from 18 June 2013, that is, a few days before the start of protests against President Morsi (Figure 5). This situation lasted for three weeks and culminated on 8 July 2013 when the rate fell to a record low of 0.1403 dollars per pound. That day the ‘Muslim Brotherhood’ protests began in two resort cities of Egypt – Hurghada and Sharm el-Sheikh. Furthermore, on 8 July 2013 an attack of the supporters of former President M. Morsi on the headquarters of the Republican Guard took place, and about 70 people were killed. However, afterwards the return to military rule led to a few unique weeks when the Egyptian pound Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 347 Figure 4. Dynamics of the Egyptian pound rate to the US dollar (1 January 2013–1 September 2013). Source: http://fx-rate.net/EGP/USD/. rate to the US dollar was constantly growing (on 2 September 2013 The Egyptian pound was equivalent to 0.1433 US dollars), which could not be achieved in the previous period. In general three months following 8 July 2013 were a unique period of the post-revolution history of Egypt when one could observe a pronounced trend towards the strengthening of the Egyptian national currency (Figure 6): Figure 5. Dynamics of the Egyptian pound rate to the US dollar (12 May 2013–1 September 2013). Source: http://fx-rate.net/EGP/USD/. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 348 A. KOROTAYEV ET AL. This was largely achieved through the almost immediate decision of Saudi Arabia, Kuwait and the UAE to provide financial aid to Egypt. In addition, such a stimulus package had to return investors’ confidence to Egypt after the overthrow of M. Morsi, to stop the decline of the country’s credit rating and to promote negotiations between official Cairo and the International Monetary Fund. But probably the most important thing is that the aid rendered by the Gulf was intended to reduce the budget deficit of the country and halt the loss of foreign exchange reserves, and that is crucial for Egypt because it imports more than half of primary goods of consumption and especially wheat (Yamani 2013). And, as is well known, wheat supply disruptions are painfully perceived by the Egyptians, as is evidenced by the second wave of agflation (i.e. steep rise of food prices), which we can confidently consider as one of the factors that led to growing discontent in the country in January 2011 (Korotayev and Zinkina 2011a, 2011b; Grinin and Korotayev 2012; Korotayev, Hodunov, et al. 2012; Korotayev, Malkov, et al. 2012; Grinin 2013). However, we should pay attention to the fact that it was the administration of the ‘Muslim Brotherhood’ that had succeeded in the slowing down of the rate of decline of the Egyptian pound up to near-zero values. Under the new administration this trend only continued. At the same time, both of them had one and the same (and thus ultimately rather doubtful) tool for strengthening the Egyptian pound – massive foreign borrowing. Figure 6. Dynamics of the Egyptian pound rate to the US dollar (31 October 2012–10 November 2015). Source: http://fx-rate.net/EGP/USD/. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 349 Before we start to study the foreign exchange reserves of Egypt, we would like to draw attention to the following aspect: the dynamics of aggregate money supply M0 (Figure 7). It is evident that, since January 2013, the rapid growth of the money supply caused by an increase in the cash emission began in Egypt. This led to the fact that, between January and July 2013, the money supply (M0) in the country increased by almost a quarter. At the same time, if we follow the dynamics of changes in the monetary aggregate M2 (Figure 8), it becomes noticeable that between January and July 2013 the total amount of cash and non-cash monies in Egypt increased only by a tenth. However, the fast increase of cash by a quarter in the first half of 2013 stands in sharp contrast with the rather slow growth of the consumer price index for the same period (Figure 9). Thus, this indicator increased by only 6% from 127.9 in January 2013 to 136 in July 2013. Therefore, money issued between January and July 2013 (about 65 billion Egyptian pounds) went not only in inflation. Moreover, in this respect the policy of Hesham Qandil’s government was continued by his successor Hazem Al Beblawi, which is clearly seen in the graphs (Figures 7–9), demonstrating the money supply as well as the consumer price index dynamics. At the end of August 2013, the government of Hazem Al Beblawi approved an additional stimulus package of $3.2 billion in order to restore confidence in the Egyptian economy (Asharq al-Awsat 2013). The leadership of the country promised the citizens that the government intended to avoid tax increases Figure 7. Dynamics of changes in the money supply (M0), 2012–2013, in millions Egyptian pounds. Source: http://www.tradingeconomics.com/egypt. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 350 A. KOROTAYEV ET AL. Figure 8. Dynamics of changes in the money supply (M2 aggregate), 2012–2013, in millions of Egyptian pounds. Source: http://www.tradingeconomics.com/egypt. and reductions in subsidies to reduce the budget deficit (the first steps in this direction were only made a year later). Such a step of Egyptian leadership could be considered as quite meaningful, because such a business plan included spending on investment rather than on subsidies and wage growth. Now we turn to the dynamics of foreign reserves in Egypt (see Figure 10): Obviously, since the end of 2005 the rapid growth of foreign exchange reserves in Egypt with some dip in 2009 caused by the global financial crisis could be witnessed. At the same time, this indicator reached its maximum on the eve of the Arab Spring, in December 2010, amounting to 36.04 billion US dollars. Immediately after the January Revolution in 2011 there began a sharp decline in foreign reserves reaching its nadir in March 2013 – 13.42 billion US dollars, which was almost three times lower than the pre-revolutionary level. Figure 9. Dynamics of changes in the consumer price index (2012–2013). Source: http://www.tradingeconomics.com/egypt. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 351 However, from April to May 2013, a growth of foreign exchange reserves in Egypt took shape, reaching in May the mark of 16.04 billion US dollars (Figure 11), which is associated primarily with the help of Qatar. As is well known, in early April 2013 the Egyptian government delegation went to Doha where the agreement on the provision of financial aid to Cairo in the amount of US $3 billion was signed. The aid was supposed to come in two ways: through the purchase of the Egyptian bonds and by making deposits in Egyptian banks. As we can see (Figure 11), foreign exchange reserves in Egypt in May 2013 increased exactly with the same amount. The Egyptian stock indexes demonstrated similar trends: on the threshold of the visit of the Egyptian delegation to Qatar on 3 April 2013 EGX 30 stopped its fall at around 4926.22 points. After that, its growth was observed up to 30 May 2013. In June 2013, Egyptian foreign exchange reserves fell to $14.92 billion. A similar trend was observed at the Egyptian stock exchanges; the EGX 30 index fell by 702.9 points by 23 June 2013 reaching the level of 4223.32. Such a behaviour of stock gamblers can be explained by entering of a country into a period of uncertainty: most likely there appeared first reports of an impending coup, but its success was not yet clear. This uncertainty vanished on the eve of the first protests against M. Morsi on 23–25 June 2013 – that is when the military finally decided to overthrow the fifth president of Egypt in the near future, and that is confirmed by the beginning of growth of stock indices (Figures 1–3). On the one hand, the position of the Egyptian army may seem very strange: it takes power into its hands when the Egyptian economy is experiencing difficulties and rising demands (on the part of international monetary institutions) to make unpopular social and economic decisions (implying, e.g., Figure 10. Dynamics of changes in foreign reserves in Egypt, 2006–2011, in billions of US dollars. Source: http://www.tradingeconomics.com/egypt. Downloaded by [Higher School of Economics] at 12:01 08 June 2016 352 A. KOROTAYEV ET AL. Figure 11. Dynamics of changes in foreign reserves in Egypt, September 2011–August 2013, in billions of US dollars. Source: http://www.tradingeconomics.com/egypt. the transition to higher prices for fuel, food, etc. [see e.g. Korotayev 2012]). However, such a political step turned out to be quite meaningful in the light of the endorsement by the Arab Monetary Fund (and other financial and political structures of the Gulf) of the financial aid to Egypt allocated subject to a change in the country’s leadership. Immediately after the overthrow of M. Morsi and his arrest, Saudi Arabia, Kuwait and the UAE announced the provision of financial aid to Egypt in the amount of $12 billion, most of it – $5 billion – was coming from Riyadh, $4 billion – from Kuwait and $1 billion – from the UAE. It was assumed that the financing will be carried out in three ways: by placing deposits in the Egyptian Central Bank, in the form of energy supplies, as well as through direct transfers (Mustafa and Flanagan 2013). Basically, these amounts turned out to be quite enough to delay the start of the solution of the subsidies issue to the period after the presidential elections, given that in Egypt on the eve of elections subsidies are a sort of ‘sacred cow’ for any government and could not be subject to cuts. Thus, the tranche to Egypt approved by the above-mentioned Gulf countries had clearly visible political goals. Note that, as a rule, a very noticeable time interval, usually calculated in months, passes from the principal decision on the allocation of loans from international financial institutions to the actual deposit of money in the account of the borrower. Meanwhile, as shown in Figure 10, in July Egypt’s international reserves rose by nearly four billion dollars. Thus, in July Egypt received a very significant part of money promised by Saudi Arabia, Kuwait and the UAE. This suggests that the principal agreement on the allocation of these funds to the ‘putschists’ was achieved (apparently, with the involvement of Hazem Al Beblawi) before the coup of 3 July. Obviously, getting the Downloaded by [Higher School of Economics] at 12:01 08 June 2016 THE JOURNAL OF NORTH AFRICAN STUDIES 353 information on the achievement of this agreement on 23–24 June 2013 led to the beginning of the growth of the main indices at the Egypt Stock Exchange. In this case, one can observe the split within the Gulf Cooperation Council. Obviously, the positions of Saudi Arabia, Kuwait and the UAE that supported military coup in Egypt were directed against Qatar that was acting in support of M. Morsi along with Turkey. In many ways, pro-Sisi coalition in the Arabian Peninsula, on the one hand, and Qatar, on the other, in respect of events occurring in Egypt, was the reflection of the overall relations between these countries. After the Muslim Brotherhood coming to power the relations between Cairo and Riyadh as well as al-Kuwait and Abu Dhabi deteriorated markedly. At the same time, the orientation of President Morsi towards Doha was rather clear. From the beginning of the Arab Spring, Qatar began actively to position itself as a key independent political actor in the Middle East arena, which could subsequently cause disapproval primarily from Saudi Arabia claiming the status of the key country in the Arab world. This has become especially relevant in the context of weakening of traditional ‘heavyweights’ of the region – Egypt, Syria and Iraq. The rapprochement of Doha and Tehran at the wake of the Egyptian coup (and after it) is also illustrative: in June 2013, the Iranian Foreign Minister visited Qatar to congratulate personally the new emir Tamim al-Thani. In turn, Qatar was one of the first countries to congratulate the new Minister of Foreign Affairs of Iran Mohammad Javad Zarif on his appointment to this post on 15 August 2013. Our young Egyptian friends (a sort of ‘leftist–liberal revolutionaries’) consider the post 3 July events in their country as ‘counterrevolution’. And we would tend to agree with them – though not without certain qualifications. Almost by definition, revolutionaries regard the ‘counterrevolution’ as something unequivocally negative; whereas we believe that the present-day political regime has serious positive respects (though, no doubt, its formation has led to a significant growth of the authoritarian tendencies). Yes, it may well be denoted as ‘counterrevolution’, as it returned to power that very block of military, economic and bureaucratic elites that had ruled the country before the 2011 Egyptian Revolution. However, as we have already demonstrated this before, it ruled Egypt in a rather effective way, securing in the years preceding the Revolution a rather successful (especially against the global background) economic and social development of this great country (Korotayev and Zinkina 2011a, 2011b; Korotayev et al. 2011; Grinin and Korotayev 2012; Issaev and Shishkina 2012; Grinin 2013). However, it would be rather wrong to say that Egypt has returned now precisely to that very state where it was before the revolution. And some newly emerging features contribute evidently to the regime destabilisation. This is first of all the radicalisation of the Muslim Brothers coupled with the Downloaded by [Higher School of Economics] at 12:01 08 June 2016 354 A. KOROTAYEV ET AL. emergence of their very strong media support in the form of al-Jazeerah’s satellite channel ‘Mubasher Misr’.3 On the other hand, there are much more of those features that have emerged during the Egyptian Revolution and the Egyptian Counterrevolution that contribute to the regime stabilisation. The Egyptian revolution of 2011 succeeded to win a surprisingly easy victory thanks largely to the following two circumstances: (1) a powerful intra-elite conflict; we speak primarily about the conflict between the military (the ‘old guard’) and the economic elite (the ‘young guard’) – the group of leading Egyptian businessmen headed by Gamal Mubarak, (2) the creation of an unexpected broad opposition bloc that united in quite a coordinated front young left liberal revolutionary secularists and Islamists (Korotayev and Issaev 2014). The situation that we observe now is exactly the opposite: (1) the Egyptian Revolution made the Egyptian economic elite reconcile with the military, and in June 2013 they acted together in a well-coordinated front that allowed such a swift overthrow of President Morsi; whereas no serious cracks in the new coalition of the Egyptian military and economic elites (that was formed in the first half of 2013) appear to be visible yet. The economic elites have understood that for them it turns out to be extremely counterproductive to continue any serious attempts to get hold of any economic assets controlled by the military, that it is much better for them to recognise the dominant position of the military in the ruling block, as well as the immunity and inviolability of the generals’ economic empire (among other things – through direct constitutional amendments). The economic elites have understood that any serious attempts on their part to get dominant positions in the ruling block may result in their losing incomparably more than gaining.4 (2) The Revolution with the subsequent Counterrevolution led to an extremely deep split in the January (2011) opposition ‘macroalliance’. What is very important is that this split took place along many lines. Within this macroalliance even the Islamist alliance was split – as the 3 July coup was supported by the second strong Islamist party – the party of Islamist fundamentalists/salafis Hizb al-Noor (as well as a number of prominent Islamic figures outside this party) (Korotayev and Issaev 2014). The secular leftist–liberal alliance has been also split, as the majority of its members were so frightened by one year of the rule of Muslim Brothers that they continue to support the present regime. However, even the forces that continue to oppose the regime remain deeply split – as the anti-regime leftist–liberal-revolutionary youth still refuses any idea of a new alliance with the Muslim Brothers; suffice to say that one of its main slogans Yasqut, yasqut illi khan, in kana àskar aw ikhwan is translated as follows: ‘Down, down with all those who betrayed – be they military, or Muslim Brothers!’ THE JOURNAL OF NORTH AFRICAN STUDIES 355 Notes Downloaded by [Higher School of Economics] at 12:01 08 June 2016 1. Note that military factories (virtually possessed by Egyptian generals) have a clear competitive advantage, as they can exploit virtually free labour of the conscripts (see e.g. Tadros 2012). 2. However, the latter estimate appears to be clearly exaggerated. 3. See: http://mubasher-misr.aljazeera.net/livestream/. 4. Emergent cracks in the ruling coalition are rather connected with the participation in this coalition of some leftist secularists (first of all, Hamdeen Sabahi and his Egyptian Popular Current [al-Tayyar al-Shàbiyy al-Misriyy]), whereas the continuation of the cooperation of this part of the ruling alliance with both military and (especially) economic elites can in no way be guaranteed – one would rather expect to see eventually the final split between the left-wing and right-wing secularists in Egypt. Acknowledgements The study was implemented in the framework of the Basic Research Program at the National Research University Higher School of Economics (HSE) in 2016. Disclosure statement No potential conflict of interest was reported by the authors. Funding This research was supported by the Russian Science Foundation [Project # 1411-00634]. References Asharq al-Awsat. 2013. “Egypt Approves USD 3,2 Billion Economic Stimulus Package.” http://www.aawsat.net/2013/08/article55315341. 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