The dominant theme in Egyptian politics has become the political struggle between the Muslim Brotherhood and the Supreme Council of the Armed Forces, and all other factions have either rallied under one of the two banners or faded vaguely into the background. It is the job of the new minister of petroleum to keep these circumstances as irrelevant as possible to the sector.
Every day, the features of post-revolutionary Egypt’s political arena become just a little clearer. The immediate aftermath of Hosni Mubarak’s fall from power consisted of a period of uncertainty in which no one truly understood the capabilities, allegiances and intentions of the political actors in place, and to some degree even the identity of the most significant actors was up for debate.
But as Egypt moved from crisis to crisis and from face-off to face-off, the Egyptian public was subjected to a rollercoaster ride of events, in which the noise pollution gradually faded into the background and the true dialogue that always ran between the lines came gradually but starkly to the fore. Today, it is almost impossible to argue that what is happening on the Egyptian political scene is anything other than a struggle between the Muslim Brotherhood and the Armed Forces, the only two players that truly matter, triggered by a simple conflict of interests.
In this context, the new minister of petroleum will face the tall task of steering the sector through the political storm, a mission made all the more difficult by the fact that he will be working under the authority of one or both of the parties involved. The ministry must keep its focus fixed on maintaining operational stability within the sector and sidestepping the political struggle as much as the situation allows. This course of action should be backed by the philosophy that a functional petroleum sector is in the interest of both the Brotherhood and the army, whether they choose to continue jostling for control or establish the uneasy quasi power-sharing structure the country seems to be heading towards at the moment.
As Egypt concluded its first true presidential elections, the two major forces have reversed authorities in a twisted dance of power. The military leadership has reclaimed legislative authority for itself after the dissolution of parliament and the issuing of a supplement to the constitutional declaration, while the Brotherhood has succeeded in clinching the presidency via the election of prominent Brotherhood member Dr. Mohamed Mursi and with it the executive authority. The roles remain ambiguous as the Supreme Council of the Armed Forces (SCAF) is not authorized to pass legislation unless the President (Mursi) approves it, while the President’s powers are severely curtailed owing to the aforementioned supplement and the amount of executive authority it retains for the military.
The Muslim Brotherhood does not appear to be in the mood for playing the role of window-dressing for a highly militarized state. Fielding a candidate for the presidency despite pledging not to do so (and winning), as well as publicly rejecting all of the military’s attempts to retain any form of political or legal power with passionate rhetoric, the Brotherhood gives off the impression of a group hell-bent on reaching true power after over 80 years of existence in the opposition.
The points of contention seem to be on their path to resolution one by one (if President-elect Mursi’s decision to swear his oath in front of the Supreme Constitutional Court as demanded by the constitutional supplement is any indication), but the fact remains that competition for control and influence between the military and the Brotherhood is highly likely in the coming period, even if a relatively stable status quo is achieved to serve as a context for such competition. The Muslim Brotherhood has given every indication that they are looking to rule Egypt, and they are therefore unlikely to settle for anything less in the long-term.
The Egyptian army has held a rather unique place in the structure of the Egyptian state at least since the revolution of 1952, and this has included significant economic activity in several sectors included ones entirely unrelated to the military, as well as clout both official and unofficial in state institutions across the spectrum. The supplement to the constitutional declaration reveals that the army’s intention is to fully preserve its special privileges and unique access to and influence and authority over other state institutions; the military leadership has effectively placed itself and its forces outside the jurisdiction of civilian institutions including the presidency, as well as providing itself with immunity from all forms of oversight by such institutions. It is a resounding irony that Egypt’s commander-in-chief will not have the constitutional right to declare war without the approval of his generals.
In fact, it could be argued that the SCAF is attempting to make the most of unique historical circumstances in order to expand its reach, or at the very least legally and constitutionally legitimize its special standing. Although rule over the country would not appear to be among the SCAF’s goals, the erection of legal and authoritative walls around the Egyptian military institution and the militarization of the state as a means of preserving interests necessarily entails an encroachment on the jurisdiction of the civilian authority.
The struggle will thus extend to the ministerial cabinet, which the President now has jurisdiction over, whereas prior to the elections the cabinet was formed by the military council. This would appear to be a zero-sum victory for the Brotherhood, but the facts reveal more complex machinations at play. While the President is to appoint the new cabinet, the military holds substantial sway in the very institutions which cabinet members govern. This is particularly true when it comes to the ministry of petroleum, which a sector of the economy that is of substantial interest to Egypt’s Armed Forces.
The simplest form of authority the army exerts over the petroleum sector comes in the form of a simple but absolute veto over its proceedings. The wheels of the petroleum sector turn when bid rounds are issued, offers are received, and agreements are struck between the state and investors willing to work on the development of the country’s resources. This entire process can be interrupted indefinitely by the absence of a military permit, a legal necessity in order for bid rounds to be conducted. The military is not formally required to provide any form of timeline for granting a permit, nor is it required to justify in detail any refusal to do so.
Needless to say, having this power grants the army significant control over the sector. For whatever reasons, should the military leadership decide that a complete halt of activity in the sector would be convenient or beneficial, it has the ability to realize such a scenario. While one cannot speculate regarding the intentions or priorities of any given faction, the fact remains that it is within the army’s power to damage the economic interest and thus the success of the next government, a government which will be led by the Brotherhood and the performance of which will reflect directly on public opinion regarding the group.
The issue of military permits is already one that frustrates foreign companies seeking a smoother, more transparent investment process, as well as government officials in the sector who are met with uncertainty and unnecessary hurdles when attempting to attract investment. Should it be used for political wrangling, or to block any particular step for political reasons, the issue would be exacerbated.
The latest political developments also place further control over the fate of the petroleum sector in the hands of the army’s top brass. Following much talk of educating the new Islamist-dominated parliament regarding the petroleum sector, parliament was dissolved and legislative power taken by the SCAF. Petroleum agreements require legislative approval in order to enter into effect, and while the SCAF is most unlikely to need much education on the matter, the power to approve or reject agreement heaps yet more authority into the lap of the Generals, authority which could be exercised for political purposes now that the institution of the Armed Forces has become an active political player.
It is unclear for how long the SCAF is supposed to hold onto legislative powers pending parliamentary elections, or when (or if) the elections will be held. If the time-span is short and the legislative authority is handed to civilians in the space of a few months, this point will matter little, but as it currently stands, the SCAF is the formal legislative branch of government and is thus responsible for approving agreements.
Formal authority exerted over the petroleum sector by the army may or may not be used with the aim of striking political blows, but that is not the only interest the military holds in the sector. The military has holdings in state-owned Tharwa petroleum, which engages in upstream exploration and development activities, as well as several renewable energy projects in partnership with foreign investors. It is also difficult to neglect the fact that retired army officers are often hired in key positions in Egyptian petroleum companies. While accusations of corruption or conflict of interest would be highly unfair, it is nevertheless a notable actuality given the amount of loyalty the military is known to enjoy in its servicemen even in the wake of their service. The military’s hand in the sector is thus not limited to oversight, but extends to indirect influence and economic interest.
The Muslim Brotherhood’s bid to rule Egypt will doubtlessly take into account the petroleum sector as well, as it is one of the engines of the national economy and a valuable economic and political asset in the Egyptian power game. The unpredictable Brotherhood may thus attempt to wrench the sector from the army’s grip, or at least contest the military’s ample presence within it.
The Brotherhood‘s eagerness to take advantage of the petroleum sector will be particularly avid owing to the economic magnitude of the sector and the importance it represents to the country, but for all their political savvy, the Brotherhood have little experience in this area and may end up doing more harm than good. Any attempt to radically change the fundamentals on which the sector function, be it in pursuit of overly populist policies or render it more inviting to penetration by the Brotherhood, may result in disaster. The possibilities include wholesale changes of high-ranking staff based on Brotherhood loyalty, sudden, radical change in the agreements model currently employed in Egypt, or insistence on uncompetitive and unreasonable terms for foreign investors in the name of protecting the national interest.
What the Muslim Brotherhood is unlikely to do is appoint a petroleum minister (if the decision is in reality solely their own) from outside a certain sphere of high-profile personalities within the sector. In reality it would be highly impractical and risky to appoint a Brotherhood figure for the post, and so the minister is expected to be a familiar face.
This person will thus be highly familiar with what the sector needs in order to thrive. The new minister must then be extremely wary of the political obstacles discussed above, and how to navigate them safely without either antagonizing the major forces or compromising the sector’s stability and development.
The new ministry must place its focus on non-partisan, non-biased, apolitical economic development, and must have a clear vision for what needs to be done in order to achieve growth, pressing through with it regardless of the conflicts or interests surrounding the sector. Some of the impediments will be beyond the minister’s control, but early success will go a long way in dissuading interference in the sector’s workings, and a distinct and explicit unwillingness to participate in the political game will help. The best thing the new minister can do about politics is to avoid them like the plague.
By Ahmed Maaty