The collapse of the Egyptian state was a real possibility following the removal of Hosni Mubarak from power, the dissolution of the National Democratic Party, and the meltdown of the domestic security services at the beginning of 2011.
But the military managed to hold on to the state by a thread. It used a mixture of political cunning and highly targeted coercive measures aimed at stemming the tide of revolutionary fervour that was sweeping the country in 2011-2012.
The fragmentation of the secular opposition and the intransigence and political inexperience of the Muslim Brotherhood allowed the military to reconquer those key organs of the state that were temporarily lost: the presidency, the cabinet, and the parliament. In doing this, the military was supported by other key elements of the state apparatus: the judiciary, the formal Muslim and Christian religious establishments, and the security services. The military even managed to co-opt, and then politically destroy, large sections of the secular opposition, including the most important man in Egypt during this period, Mohamed el-Baradei.
The urgent task facing the new rulers of the state was to reassert its authority and regain political stability. This they have achieved through a mixture of brute force to crush any political opposition and ensure that what had happened in January/February 2011 would never happen again. In addition, the new regime sought to rebuild the state’s credibility in the eyes of the people through resuming the provision of essential public services and restoring their feelings of security and nationalistic pride after many months of damaging uncertainty.
Abdel Fatah al-Sisi became president in June 2014 amidst popular hysteria. Many of those who were in Egypt at the time registered their alarm at what seemed to be the rise of fascist tendencies in society. Deadly violence committed by the regime against the Islamist opposition was condoned by a majority of the population to prevent the scenario that Egypt could degenerate and become like Syria, Iraq, or Libya. The regime was the source of this message. But it was a message that fell on willing ears.
Slowly, and thanks to extraordinary financial support (up to $40 billion according to some estimates) from regional friends like Saudi Arabia, the United Arab Emirates, and Kuwait, the state began to regain balance, and reclaim both the street and the public sphere.
Activists retreated. The last attempt to openly challenge the authority of the state was in April 2016, when demonstrations erupted in anger over the regime’s decision to transfer sovereignty of two strategic Red Sea islands to Saudi Arabia. Rather than coercing the regime into reconsidering its decision, these demonstrations only resulted in the regime culling the last remaining potential for revolt in Egypt. Since then, it felt secure enough to turn its full attention to tackling Egypt’s economic crisis.
But there are at least three political factors that should make outside observers view the apparent stability in Egypt under al-Sisi with caution.
First, the regime has been engaging in a prolonged counter-terrorism campaign in the Sinai without evidence of significant tangible results. This campaign is alienating the native population, is a resource drain and could be highly destructive to the regime’s credibility if the Sinai fully evolves into an international theatre of operations in the ongoing global war on terrorism.
On many occasions, terrorism has spilled over from the Sinai into the mainland, and other groups of disgruntled youth from the mainland, who are not affiliated to the Islamic State, have emerged: two recent examples of such groups are Hasm and Liwaa al-Islam who claimed responsibility for a wave of attacks in the second half of 2016 targeting state establishments and public officials.
On one hand, the regime is capitalising on this ongoing threat to portray itself as an ally for the West in the ‘war on terror’, and as the only buffer against chaos. This is a game that the Egyptian regime has always played well since Mubarak’s time as president. But on the other hand, the severe blows that the military is receiving in the Sinai, and the increase in targeted terrorist attacks in Cairo and the rest of the country, gnaws at the regime’s legitimacy and is an ongoing embarrassment, in addition to their devastating impact on tourism and foreign direct investment.
More ominously, the regime’s heavy-handed counter-terrorism tactics, both in the Sinai and the mainland, are likely to increase radicalisation and thus lead to the formation of new groups of violent extremists.
Second, the regime itself is rife with internal conflicts and contradictions, as seen for example in the so-called ‘fight of the agencies’, a reference to Military Intelligence, General Intelligence, and the National Security Agency. This is a black box, in a state that has no conception of freedom of information. But most indicators show that Military Intelligence, headed by al-Sisi before his appointment as Defence Minister by Mohamed Morsi, has now emerged as the most powerful agency in Egypt.
Finally, and most significantly, the apparent stability in Egypt is undermined by the state’s decaying institutional structure. The Egyptian state led by the al-Sisi regime has no social base, no backbone, represented by a large political organisation such as the National Democratic Party or the Muslim Brotherhood. Its performance in almost all sectors is deteriorating. Illusory mega-engineering projects have not brought the promised economic gain to the population. And, most significantly, its rulers are guided in their attempt to create solutions to the country’s problems by the same type of mental model (and misguided by the same cognitive biases) that led to the creation of these problems in the first place.
Without a radical shift of approach, it can only be a matter of time before similar initial results lead to similar outcomes, i.e., another attack on the state by the angry masses. Another ‘Arab awakening’ might be looming, as suggested by a recent Economist article reporting on the findings of the UN’s most recent Arab Human Development Report focusing on youth and the prospects for human development in the region.
The illegal oppression of the opposition has so far been successful in delaying this scenario. A recent report documents 554 bans on travelling to and from Egypt since 2011, the overwhelming majority of them, 497, since July 2013.
Violations of law committed by the regime were much deadlier. Even from the beginning, the regime committed what is arguably the worst incident of mass killing in modern Egyptian history when it violently dispersed two sit-ins by the Muslim Brotherhood and their sympathisers protesting the coup that ousted Egypt’s first freely elected president from power. Since then, as attested to by the government’s own statements, around 22,000 people have been detained on ‘terrorism’-related charges in the year up to the middle of 2014. However, the real number is likely to be higher, closer to 41,000, including an estimated 29,000 who are either members or supporters of the Muslim Brotherhood.
Other abuses include unlawful killing, excessive use of force, forced disappearances, arbitrary arrests and detentions, torture, and unfair trials. Freedom of expression and freedom of association have been curtailed.
The abuse is not restricted to political activists. It exists at all social levels and is random and brutal. If one is poor, one might be slapped on the face or kicked in the back by a low-ranking police officer, stopped and searched without a search warrant, or simply verbally abused and humiliated for no apparent reason. In the absence of modern standards of policing, and of proper channels of accountability, abuse of state power is pervasive.
And the abuse is not restricted to political rights. Social and economic rights are routinely violated, whether by the state or by powerful individuals and groups that are well connected to circles of power. The current revision of the Trade Union Law shows little sign of improving problematic labour relations, which have been criticised by the ILO.
Women are harassed in the streets and have no recourse to protection by the law, implemented by men who themselves routinely harass women. Discrimination against religious minorities is widespread, as are violations of the rights of refugees and migrants.
The situation in the Sinai is particularly worrying. Hundreds have been forcefully removed from their homes along the border with Gaza to create a security buffer zone. Egypt is slowly turning into a wasteland where the rule of law has become only a theoretical concept. On the ground, raw power has the final word.
The lack of the rule of law is not the only manifestation of pervasive institutional failure in Egypt. While rights are being routinely abused, most needs are continuously being unfulfilled.
Lack of oversight and accountability have nearly destroyed all aspects of public service. Healthcare provision is severely lacking and must be regarded as one of the worst examples of social rights violations.
Education is on the floor: The Global Competitiveness Index 2012/2013 has placed Egypt in last place globally in terms of the quality of its primary education. In this edition of the report, Egypt’s general ranking was 107 out of 144 economies covered by the report, down from position 81 (out of 139) in 2010/2011. In the most recent edition, Egypt’s position deteriorated further, to 115 out of 138 countries, a movement in the wrong direction.
This overall deterioration in Egypt is a symptom of historical structural imbalances. And it forces us to refocus our gaze on the state. While the staff and country experts of international development agencies were busy collecting evidence to prove the success of the bundle of economic liberalisation policy measures they were promoting in the 1990s and 2000s, they failed to take sufficient notice of political and social dynamics lying not too far beneath the surface of aggregate macro-level data and subjective governance indices; dynamics which led to the explosions of 2011 and the institutional meltdown that followed in Egypt and many of the Arab ‘republics’.
Any attempt at institutional reform must first begin with an explanation of why institutional failure has happened in the first place, and of the factors which perpetuate it and block the progress of deep structural reforms.
The failure of economic and political development is almost always the outcome of accumulated institutional failure. Even if the development policy agenda could be miraculously recalibrated and a set of new approaches and instruments researched and created, success would still prove elusive without a deeper understanding of why existing institutions in Egypt have failed in the first place, and why this failure persists. “Getting out from under bad institutions is likely to be the most difficult part of trying to develop new ones.”
Approaching this problem would require a careful analysis of local contexts and their histories, a clarification of the different levels of institutional arrangements that exist in society and an understanding of social power and how it is exercised in the context of the state.
In this context, it is important to understand what institutions are and what their function in society is. Institutions are the humanly-devised rules that govern relationships: within the state, between state and society, and within society. These rules provide constraints on the behaviour of actors. When these constraints are badly enforced, life becomes brutal: the more powerful can simply ride roughshod over those with less power. This is the case in Egypt now.
Institutions exist on four levels. Arranged from higher to lower, where the higher level imposes constraints on the levels below it, at level one we find what Williamson calls the “social embeddedness” level: informal norms, customs, traditions, etc. But, in addition, we find other highly formal structures such as religions, which in some developing societies, Egypt included, serve as the ultimate constraint for many actors.
Institutions on this level persist sometimes for millennia and are difficult to change. They have mostly evolved spontaneously in the distant past and have since then been ‘locked-in’, either because they still serve some functional role or because of their acquired symbolic significance. They serve as the cultural ‘toolkit’ from which society draws most of its ideology and lower-level institutional arrangements and various other strategies of collective social action.
At level two, we find the ‘institutional environment’. At this level are the fundamental rules of the game for a given society, for example, a constitution, which serves as a basis for creating other rules down the institutional chain.
Although easier to alter than level one institutions, the institutional environment changes slowly, over a period of decades, sometimes centuries, as is the case, for example, with the US Constitution. It is at this level that we find society’s political settlement or the fundamental balance of power among social forces. Because of these power dynamics, change at this level usually happens after a crisis, for example, the Arab Spring.
Below level two, we come to level three, the ‘institutions of governance’. Here we find the plethora of laws governing the day-to-day political and economic exchange in society. Institutions at this level may change more rapidly, possibly with each change of government. But they also may suffer from inertia due to their ex-post distributional implications.
In advanced capitalist societies, where the main form of authority is of the rational bureaucratic variety, we find that this level is occupied by formal institutions. In other parts of the world, and under different types of authority, formal rules and informal constraints might carry equal weight as determinants of behaviour, as well as practical norms, a term that refers to those informal, or even illegal, norms and behavioural regularities that are aimed at securing an outcome sanctioned by a formal institution outside the regular channels. In other words, the term describes practices of economic and political corruption such as bribes, extortions, vote rigging, etc., which are a common feature in Egypt and most of the developing world.
Finally, we arrive at level four, the actual play of the various political, economic, and social games. This is the level of actual contractual arrangements between principals and agents at the micro-level of the household, the firm, or a government agency. Both formal and informal rules provide the incentive structure at this level of analysis, and these rules may change relatively rapidly.
These four levels of analysis, together with their enforcement characteristics, provide an adequate framework to capture the extent to which rules and norms permeate society: we live in a rule-based world.
These four levels of analysis are complementary. The lower levels are embedded in the levels above them. A ‘good fit’ between these levels is a healthy feature in any society. This means that the incentives for action provided by all four levels reinforce each other. Lack of fit, on the other hand, can be very problematic as this means there are incompatible incentives operating in society.
A good example is the debate about interest rates in some Islamic societies: religious teachings (level one) prohibit some forms of interest. This, however, contradicts modern banking practices (levels three and four) which have become unavoidable in our day and age. One of the problems of the developing world, including the countries in the MENA region, is this problem of lack of fit and the existence of incompatible incentives in society.
Most development agencies which design institutional development interventions, for example, to improve the quality of governance, focus on level three. It is no wonder that so far, we have seen very little success in this area. Take a country like Egypt. It has a constitution, a sophisticated legal structure, and most of the institutional architecture of a modern state. But these are impressive texts and not much more. They are either not enforced, or enforced in a selective and random manner at the behest, and for the benefit, of the political and economic elite.
When studying this phenomenon, it is important to ascertain the causes of this failure of enforcement. For example, are rules not enforced because the resources (personnel, finance, etc.) required for effective enforcement are lacking, or are they not enforced, or enforced in a selective manner because powerful actors benefit from this? The difference has implications for the choice of strategy of intervention. In the former case, technical assistance and capacity building programmes ought to be sufficient to solve the problem. But in the latter case, no amount of technical assistance can solve the problem of selective enforcement in the absence of political will. In this case, until there is a political will to take rule enforcement seriously, resources are better shifted elsewhere rather than squandering them in interventions doomed to fail.
This problem of enforcement failure has significant implications for designing new institutions. What is the point of creating new rules when these rules would not be enforced anyway? Putting this in its broader historical context indicates its complexity. The moral of the story is not to give up on the hope of reform. Rather, the idea is to approach reforms in a sober and modest manner. Institutional change is a conflict-ridden process.
Institutional change ought to be: 1) done from the bottom-up, to rebuild the state from below, starting from the fourth level outlined above, and focusing on enhancing the enforcement capacity of the state where it meets society; and, 2) institutional change at the level of the institutional environment (the second level outlined above) must be based on a consensus of competing social forces.
Egypt’s foreign backers are uniquely positioned to provide the type of technical assistance required to help in the process of rebuilding the state from below, and to convene and facilitate the type of dialogue that is required to help Egyptians communicate effectively with one another to reach the new social consensus needed to build the institutions of the state from above.
Senior Researcher, Center for Middle Eastern and North African Politics, Freie Universität Berlin
 See the following two reports for more details: Stewart, Scott (2016) “Assessing the Jihadist Threat in Egypt: The Sinai Peninsula,” Analysis, Stratfor, June 29, 2016 and Stewart, Scott (2016) “Assessing the Jihadist Threat in Egypt: Mainland Egypt,” Analysis, Stratfor, June 30, 2016
 The Economist (2016) “Another Arab Awakening is Looming, Warns a UN Report,” November 29, 2016 The UN’s report could be found at the website of the Arab Human Development Reports
 Following a one-year-long investigation, Human Rights Watch has estimated that the number of those killed on a single day, August 14, 2013, is at least 817 and could be higher than 1000. See HRW (2014) “All According to Plan: The Rab’a Massacre and Mass Killings of Protesters in Egypt,” Washington, D.C.: Human Rights Watch
 Evans, Peter (2005) “The Challenges of the Institutional Turn: New Interdisciplinary Opportunities in Economic Theory,” in Nee, Victor and Swedberg, Richard (eds.) The Economic Sociology of Capitalism, Princeton: Princeton University Press. (p. 101)
 The state has a double nature: as an ensemble of rules, and apparatuses entrusted with the enforcement of these rules; and as an arena in which competing social forces engage in a struggle to control these apparatuses that are a mighty source of institutional power. See Migdal, Joel and Shlichte, Klaus (2005) “Rethinking the State,” in Schlichte, Klaus (ed.) The Dynamics of States: The Formation and Crises of State Domination, Hampshire: Ashgate Publishing Limited.
 North, Douglass (1990) Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
 Khan, Mushtaq (1995) “State Failure in Weak States: A Critique of New Institutionalist Explanations”, in Harris, J., Hunter, J. and Lewis, C. (eds.) The New Institutional Economics and Third World Development, London and New York: Routledge; Poulantzas, Nicos (1973) Political Power and Social Classes, London: NLB and Sheed and Ward.
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