THIS ESSAY WILL ARGUE THAT EGYPT has been developing along capitalist lines throughout its republican years. The Nasser regime, which overthrew the monarchy and declared Egypt a republic, was anti-colonial and gradually developed a state form of capitalism that was characteristically nationalist. Integrally linked with this development was the formation of new class fractions that eventually dominated the Egyptian social formation including the state apparatus. Further, this development of the political economy had no commitment to democratic mass mobilization. Consequently, the material gains that the masses of peasants and workers had gained during the Nasser regime proved to be ephemeral.
Nasser's defeat in the 1967 war and the subsequent structural changes in the international situation gave an impetus to seemingly dormant class fractions which pushed for the integration of Egypt into the global economy. The national capitalist development in the form of state capitalism was perceived by these capitalist class fractions to be an albatross that needed to be done away with.
The Sadat period saw the reversal of national capitalist development and the integration of Egypt into the international capitalist market primarily through the policy of Infitah (opening). The Sadat regime was essentially a continuation of capitalist development under new conditions. Since Sadat's assassination, the succeeding Mubarak regime has intensified Egypt's integration into the international capitalist system. Finally, changes in the regional and international environment allowed the Mubarak regime to return Egypt to the Arab fold while completing the process of Egypt's integration in the international political economy.
FREE OFFICERS AND FREE ENTERPRISE
Three agricultural crises in the 1920s and '30s and the onset of World War II gave the national bourgeoisie the impetus for industrial development. This so-called import substitution stage of the economy lasted into the 1950s and allowed the bourgeoisie to gain in strength. A tradition of free enterprise was well entrenched in Egypt on the eve of the July 1952 revolution.
The new Free Officer's regime was not at all against private property. Private enterprise, which had been operating in a more or less free environment, was left undisturbed during the Free Officers' first few years in power. At the beginning of the revolution the role of the state in the economy was basically restricted to the development of infrastructure. The public sector was responsible for only 13% of the GDP (Gross Domestic Product) while the private sector contributed the remainder of the GDP. The new regime made a point of emphasizing the centrality of private enterprise to the economy. Industry, agriculture, domestic and foreign trade, transport, banking, electricity and water were all part of the private sector. The regime stressed that it was a partner with the private sector and would restrict itself to heavy industry. It also reduced taxes "on profits and undistributed dividends," and allowed foreign investors to hold majority shares in domestic companies.(1)
While the Free Officers did not threaten private property, they, however, were intent on destroying feudalism. The agrarian reform of September 1952 was a direct attack on the landed aristocracy. It limited personal ownership to 200 feddans (1 feddan is approximately 1 acre).(2) The law was not radical except to the extent that it weakened the landed aristocracy. The effect of this law was to create a new agrarian class sector of rich peasants and bolster the small peasant sector.(3)
The 1952 agrarian reform law helped to restructure the economy by favoring the industrial and commercial bourgeoisie. It also tried to persuade the landed aristocracy to invest in the other economic sectors.
Despite all the regime's efforts to encourage private enterprise, "most capitalists were panic-stricken. Many emigrated abroad. Most did not abide by the state's plans; instead, they continued to do business and to accumulate and consolidate their own wealth and economic power."(4)
Zaalouk argues that the Free Officers made "a false distinction between the large landowners -- the holders of political power -- and the bourgeois capitalists, who were thought to hold only economic power." Due to this false assessment, the Free Officers allowed the bourgeois capitalists to "penetrate the various political and economic organisms set up by the state." Zaalouk seems to assume that the Free Officers did not need any help in making sure that the economy moved forward. Further, this assumption is based on the unsupported and unspoken premise that the regime had not sought to integrate many of those capitalists in the state machinery. Those capitalists had skills and know how that the regime needed to run the economy. The regime's commitment to private property made it relatively easy for many of those tied to the old regime to serve the new one. In fact, Zaalouk points out that the Free Officers were "a nationalist military group of petty bourgeois origin." As such, their ideology was capitalist. They, as well as the old industrial bourgeoisie, wanted to industrialize. This bourgeoisie was concentrated primarily in two groupings: the Misr (Egypt) group and the Federation of Egyptian Industries which "continued to make its voice heard, and its advice was indeed fully heeded by the new regime."(5)
However, two main differences existed between the industrial bourgeoisie and the new regime. The first was over the role of foreign investment in industrialization. The regime did not want to accord a major role, as the industrialists desired, to foreign investment. The second, which is a partial explanation of the first difference, was that the state wanted to maintain control of national development and have the industrialists serve that purpose.
Both the regime and the industrialists, however, were in effect allied against those who wanted to go back to a purely free enterprise system. The regime had the wherewithal to intervene in disputes between the industrialists and the purely free enterprisers. It appeared to be neutral, since most economic sectors were held privately, and was definitely capitalist.
FREE OFFICERS' DICTATORSHIP
The U.S. Embassy had been in touch with the Free Officers for some time before the coup,(6) and asked the Free Officers what they exactly stood for. They were against British occupation of the Canal Zone, the Monarchy, and for modernization along capitalist lines. Those goals were congruent with U.S. global interests. Colonialism was on the wane in both Asia and Africa, and the U.S. was in support of independence movements in those areas. It sought to establish political, economic and military ties with the newly independent countries. It was not difficult, therefore, for U.S. Ambassador Jefferson Caffery to support the coup.
On 26 July 1952, three days after the coup, the Free Officers sent King Farouk into exile. On 12 and 13 August 1952, 10,000 workers staged a strike at the Misr Company textile factories in Kafr al-Dawwar in the Delta. The army intervened, several workers were killed and many were injured. The following day two workers were summarily executed and many others were jailed by the regime. Directly after, the Free Officers jailed thirty others who were alleged to belong to the Communist Party.(7)
Having dealt a major blow to the workers' movement and the Communist Party, the ruling junta moved quickly against the monarchy.
DICTATORSHIP AND MASS MOBILIZATION
In early 1953, Nasser hastily created a mass organization, "The Liberation Rally," which he headed and used to suppress the political opposition. He also executed six Muslim Brothers and tried over 1,000 of them after the 26 October 1954 failed assassination attempt on his life. Nasser then moved quickly to consolidate his power: He dismissed President Naguib on 14 November and had himself elected President of the Republic in accordance with the Constitution of 16 January 1956. Article 192 of the Constitution also allowed a National Union (NU) to replace the Liberation Rally.(8)
Nasser's dictatorship expressed a major political trend among the masses: A majority fraction of the rural and urban petty bourgeoisie was anti-colonial, anti-communist and opposed to political Islam. Equally fundamental to the ideology of this fraction was its idolization of their leader.
In describing this period, Vatikiotis is of the opinion that ". . . internal consolidation of power by Nasser was by no means complete with his triumph over Naguib and the Muslim Brothers."(9) But by then Nasser was secure in his position, especially after more arrests and purges in 1955 and 1956, primarily of leftist elements. The most that could be said is what Zaalouk points out: "Although the old bourgeois capitalists and businessmen had indeed penetrated the Liberation Rally and become influential, they were not in direct control of the state apparatus, nor were they able to directly obstruct nationalist development policies."(10) Two points need to be made in this connection: 1) By the end of 1956 Nasser's popularity soared and he became a figure larger than life not only in Egypt but in the entire Arab World. No one was capable of effectively challenging him after the failure of the Tripartite invasion of Egypt; and 2) Zaalouk's argument does not mean that Nasser had not consolidated his power. On the contrary, it may be argued that Nasser had succeeded in integrating sections of the bourgeoisie into the regime and thus consolidating, rather than endangering, his power base. It must be remembered that the regime was not inimical to capitalist development and it needed to marshal all natural and human resources for that goal. These bourgeois forces were not a threat to the regime's existence. Vatikiotis does not mention what he means by his assertion; nor does he offer any proof to...