The Egyptian army without a budget... and the state without an answer

The SIPRI Institute – chaired by the Egyptian diplomat Kareem Haggag, a lecturer at the American University in Cairo – published a research paper titled "Understanding Egyptian Military Spending" in 2020, covering the period from 2010 to 2019. What distinguishes this paper is that it is not just tables and numbers, but an investigative report that attempts to dismantle the items of official spending under the title of defense and national security.

When I read this study, a question came to my mind that I challenge any Egyptian citizen to answer: Where do we fund arms deals? How much have we paid? And how much will we repay with interest? Over how many years? And are the figures announced in those deals actual, or are they much lower than what was actually paid?

To understand the problem – or the disaster – we must look at the numbers step by step.
Egypt has the largest army in the Middle East and North Africa, with approximately 439,000 active soldiers in 2019, a huge number. The country also maintains a large arsenal of weapons and carries out ongoing operations, especially in North Sinai.

During the period from 2010 to 2019, Egypt signed 75 arms deals with 15 countries, 67 of which it has already received, nearly three times what was achieved in the previous decade, which had not exceeded 23 deals.
As for the most prominent purchases: Rafale aircraft (24 planes with their missiles), S-300 systems, MiG-29 aircraft, FREMM frigates, German Gowind submarines, and in 2019 Sukhoi-35 aircraft, Meko A-200 frigates, and AW-149 helicopters.

The total cost amounted to about $16 billion. Even if we assume that half of it is loans, this means that what was actually paid was about $8 billion over five years, which translates to $1.6 billion annually, almost 40% of the official defense budget, not accounting for the salaries and operating and maintenance expenses that also consume billions. Meanwhile, the Ministry of Finance announces that the average military spending does not exceed $3.8 billion annually.

So how can we buy all these weapons while the announced figures are much lower? This official spending barely covers salaries and operating and maintenance costs. In 2019, Egypt was ninth among 14 countries in the region in military spending; Saudi Arabia spent about 62 billion, Turkey and Israel about 20 billion each, and Iran only 13 billion.
Our percentage of GDP is 1.2%, the lowest in the region, while the regional average is 4.4%. Furthermore, military spending as a percentage of government spending does not exceed 4.2%. It is true that the figure in Egyptian pounds rose from 25.4 billion to 66.3 billion pounds, but after accounting for inflation, it becomes clear that real spending has decreased by about 18%, despite salary increases multiple times, knowing that about 60% of military spending goes to wages, and the rest to operations, maintenance, and purchases.

And here is the question that no one has an answer to: How did we manage to buy all that? And how did salaries increase while official spending declines?

The paper clarifies something everyone knows: The military in Egypt is no longer just a military institution but has become a huge economic empire managing major projects – from the Suez Canal to the administrative capital and roads, lands, and companies – generating huge revenues.
President Abdel Fattah el-Sisi has stated that the revenues from these activities amount to between 1.5% and 2% of GDP, approximately 324 billion pounds in 2019.

But where does this money go?
According to the paper, these revenues are deposited in special accounts under the direct supervision of the presidency, not subject to the oversight of the Central Auditing Organization or the parliament, and no public data is available about them.

Thus, if a deal like the "Rafale" is announced at $5.2 billion, we do not know the actual cost accurately — maybe 6 or 7 billion — nor the real source of funding: Is it from military institution profits? Or external support? Or loans? No one knows anything.
This simply means that we the people live in a state where we do not know where our money comes from, or how it is spent. Money is gathered from state-owned projects, which rightfully should return to its treasury, not to accounts outside its oversight.

The paper also questions: Could some deals, like the Mistral deal or the German frigate, have been financed by Gulf countries? There is no conclusive evidence, only general statements from the president indicating that the military buys from "a special reserve," but there are no documents proving that. And even if we believe this justification, no one knows if commissions were involved in these deals? If so, to whom were they paid?

Therefore, the issue is not just financial ambiguity or unknown funding for deals, but a complete economic model that redefines the relationship between the military, the state, and the people. When military spending is outside the oversight framework, the ambiguity is not only financial but also institutional – as the source of decision-making shifts from state institutions to individuals who are not subject to any oversight or accountability.

Here lies the core of the danger:
This article does not question the patriotism of the army or the Ministry of Defense; rather, it warns of a serious threat to everyone – because it establishes a parallel economy within the state, achieving gains whose size is unknown and spending money whose fate is uncertain, without the knowledge of the Ministry of Finance or the parliament or any oversight body in the state.

The issue is not sharing information with an external entity, but a lack of coordination between the state's own agencies.
There has become a complete separation between the state as civil institutions (supposedly civil) and the military as a huge economic entity that owns resources that should be public.

This situation distorts the distribution of resources across the country because when defense spending turns into a black box, it siphons funding from vital civilian sectors like education, health, and scientific research – which are the true foundations for building national security.
And when no one questions this paradox, we face an unseen disaster.

The paper concludes with a clear result: The real danger to national security does not come from a lack of funding, but from a lack of transparency, because when you raise transparency from the equation, the state loses the ability to know the real figure, to develop policies, to hold officials accountable, or even to realistically plan for the future.