The Arms Industry Will Be Crucial in a Post-Mubarak Egypt

With anti-government mayhem closing down Cairo and paralyzing the economy, the Egyptian people must have a genuine fear for their own and their country’s future.  Possibly overlooked at this juncture, the Egyptian arms industry will play a very important role in both economic and military terms for the future new administration.

There is cause for concern for the West in this power shift as the two major allies, the USA and Israel, must consider the prospect of heavy Muslim bias in future dealings with the Republic of Egypt.  Dictators are predictable; power through a stream of money and weapons and whatever appeals to their whims affords control.  An Egyptian democracy or version thereof however will not bode well for existing relationships in place.

Egypt anointed itself the “lead manufacturer of weapons and weapon components among the Arab countries”.  Although immodest this boast is true.

Egypt was the first Arab country to industrialize and move into serious manufacturing so production capacity is well established. The industrial transition was done originally by the occupying Brits and accordingly there was some regimen to the set up of the production facilities, albeit British. And now chugging into the 21st century, Egypt has produced everything from small arms and rifles right up to naval cruisers and have refined essential manufacturing expertise—a requisite in weapons building.

But industry and infrastructure wasn’t always the case in the land of the pyramids and, during the Nasser era, economic diplomacy deserves much of the credit for establishing the country’s military prowess.  A unique early relationship between the USSR bartered weaponry for cotton in an arrangement that permitted Egypt to outfit their underequipped military with Soviet arms avoiding hard currency for the cash strapped nation.

The Egyptian Armed Forces were equipped with their versions of Russian designed weaponry right up until 1971, when Sadat abruptly switched allegiance in favour of the USA and ousted the Soviet advisors, keeping the equipment and stockpiles. Egypt was in a position to build weapons on her own, and did just that.

The Military were the obvious first customers for Egyptian armaments and the standardization of their own hardware rendered from surplus Soviet weapons was close behind. It kept the factories working as they developed markets through the’ Infitah’ economic reform policies by Sadat.

And these factories were poised and ready for the tsunami of petro dollars that would flood the region. Other arms manufacturers were beginning to investigate joint-venture arrangements, as always sensing new markets and profit.  Orders began to come in. It only takes a few local conflicts to set up shop and a war puts you right into business.

The Egyptian Sakr-18, 122mm multiple rocket launcher delivers 40 rockets from the back of a truck with the touch of a button. This is a direct knock off of the Soviet BM-21.  There is a 164 meter remote launch cord for the faint of heart. These MRLs proved very effective at neutralizing Iranian missiles.

The Sakr-18 alone cemented the strong trade relationship with Iraq during the protracted 1980-1988 Iran Iraq war.

Iraq became the biggest customer for the Soviet surplus as well as Egyptian production. Egypt had munitions plants located to feed the routes for shells, cartridges and rockets as well as spares and parts. A significant amount of planning went into developing the repetitive revenue stream of munitions as this “razor blade business” from the Iraq Sakar-18s was profitable and kept the rocket munitions operation going with two shifts for the duration of the war.

Armoured personnel carriers were built for Kuwait, Oman and Sudan and a range of other weapons and equipment throughout the Arab states in lesser quantities.

Egypt also produces airplane engines and established their modern plants and facilities with technical assistance from German engineers.  The initial production engines were the E-200 for the HA-200 Al Kahirah subsonic trainer and the E-300 for the HA-300 Helwan supersonic fighter.  The engine operation was merged with the AOI in 1975.  They have graduated to far more sophisticated aircraft with weapons guidance systems and state of the art armaments.

In 1975 the Arab Organization for Industrialization (AOI), an intergovernmental body, was established and located in Cairo as a counter to the perceived threat from the superior Israeli defence programs.  The Arab states were frustrated at being susceptible to the western arms machine in what they considered preferential treatment to other buyers, namely Israel.

The partners certainly had the finances to develop their own industry but it takes a visionary to make an enterprise successful and that can’t be bought off the shelf. The AOI equipped with hubris and envy was never in the same league as the Israelis.

The AOI had four equal partners, Egypt, Qatar, Saudi Arabia and the UAE. They undertook this venture to establish a modern Arab arms industry located in Cairo. The cost of joining the club was $1 billion US in 1975 dollars.

Sadat, the then Egyptian President, sagely maintained the AOI isolated from Egypt’s Department of Defence as it was a multinational joint venture and not to be perceived by the partnership as exclusive.

The joint venture abruptly disintegrated when in 1979 Egypt’s Sadat signed a peace treaty with Israel’s Menachen Begin in Washington. Both men received the Nobel Peace Prize for the landmark truce and for a deluded period it was hoped that peace may prevail.

The Arab states retaliated within days and placed a boycott on Egypt. They were suspended from membership in the Arab League and the partners in the AOI enterprise in Cairo relinquished their roles, forfeited their shares and resigned.  Egypt was the first Arab nation to recognize Israel.

Sadat also got a bullet in the head two short years later from an Arab fundamentalist and was succeeded by Mubarak.

Under the Camp David Accord in 1977 Egypt gained significant foreign funding from the US including subsidization of the Egyptian Military.  US Military funding up to 2007 amounted to $ 455 billion for weapons development.

It is speculated that significant portions of the aid from the US has been spent on cementing the regime’s internal security, and building the infrastructure for The Mukhabarat, Mubarak’s dreaded secret police.  Huge sums of military aid are in constant movement as American defence contractors receive significant orders for every type of armament including jets fighters and missiles numbering in the hundreds of millions of dollars per delivery.

The AOI is currently a separate entity and still owned outright by the Ministry of Industry. If the other partners in AOI resume their roles post Mubarak, it will certainly bear bitter fruit for the west.

Egyptian policy has been the expansion of the domestic arms industry under Sadat and Mubarak as well as Egypt’s now very lonely neighbour, Israel.
That was yesterday, today is today and all bets are off.