2. The Origins of the ‘Abbud Group and Its Rivals

[P]olitical parties as such have no decisive influence, since all authority is in fact vested in a small group of families.…There are, furthermore, wealthy persons like Ahmad Abboud Pasha who though unaffiliated with any party exercise a considerable influence on Egyptian policy.

There is no single path which local investors have followed in building capitalist industry in late-colonial and postcolonial societies. Certain paths seem well worn however. In pioneering new ventures and charting new industrial sectors, domestic businessmen often have joined forces with foreign capitalists—international financiers, banks, manufacturing corporations, and engineering firms—as well as with local competitors. Similarly, they have looked to the agencies of the state for resources, subsidies, protection and related means of underwriting risk and guaranteeing profit. In this chapter, I highlight some of the basic landmarks of this particular development path in Egypt by analyzing those who traveled it in the decades after World War I.

The economic dislocation of the war years—shortages, acreage restrictions, the loss of export markets—revealed weaknesses in the agroexport-based economy and reinforced those members of the business community calling for diversification (Berque 1972; Tignor 1976, 1980a and 1984; Deeb 1976 and 1979). At the same time, the war fueled resentment against the British occupation and catalyzed a broad-based movement of resistance. Many Egyptians recall the revolution of March 1919 as the nation’s finest hour. In its wake, Great Britain retreated from its plan to incorporate Egypt into the empire and, by granting a form of limited independence in 1922, took the first tentative step toward ceding state power to Egyptian institutions and officials.

The full impact of these years on the evolution of the political economy must be assessed both in terms of the development of new ventures and sectors and also in terms of the rise of new centers of power within the domestic business community. Egyptians sought to join the ranks of the country’s capitalists. The political changes ushered in by the war proved immensely helpful to Egyptian capitalists who could finally begin to overcome the significant entry barriers erected in the mid-1800s. From the perspective of these aspiring economic elites, manufacturing was one potential area of investment. The dominant sectors of the economy, such as finance, cotton export, transport and construction, were equally inviting avenues for the pursuit of profit and power.

The rise of the banking group around Tal‘at Harb, the commercial complex steered by the Yahya family and the construction empire built by Ahmad ‘Abbud signified a shift both in the weight of local economic forces and in the sectoral composition of investment activity by local business groups. Politics played an important role in the unfolding of these twinned processes, but little is known about the strategies employed by Egyptian investors or about the conflicts that engaged these new key interests along with the rest of the local business community. Certainly these issues have never been reducible to some unequivocal antagonism toward foreign capital on the part of local investors or, the opposite, a compulsion to serve these same foreign firms.

The activities of the ‘Abbud group, a closely controlled but disparate set of enterprises steered by an Egyptian contractor, Muhammad Ahmad ‘Abbud, afford a unique vantage point for studying business and politics in post–World War I Egypt. ‘Abbud’s legacy is both fascinating and controversial. Unlike the other Egyptian capitalists who attained great wealth and power in this era, ‘Abbud launched his Egyptian business career relatively late, having obtained his first contracts around 1924. By comparison, the Yahya group dates back to the 1860s. Harb, who would go on to found Bank Misr, joined one of the first Egyptian business groups in 1905. In other words, it was ‘Abbud’s star that rose swiftest.

The conflicts that accompanied this meteoric ascent in Egyptian business and politics are undoubtedly factors in the conventional portrayals of ‘Abbud in much of the colonial-exceptionalist historiography as the bête noire of the bourgeoisie. He is represented as a core part of the reactionary social coalition that allegedly brought about the end of an autonomous industrialization project begun with the founding of the Misr group in 1920. In this way, the economy itself is seen as the second face of a fatefully compromised project on the part of the national political elite to secure complete independence for the country. These two nationalist projects are portrayed as rising and falling (and rising again after 1952) in tandem.

This chapter argues for a somewhat different trajectory for the political economy. Coalitions of local investors and allied interests—business groups—had emerged in Egypt decades before the founding of Bank Misr. The investment activities of Egypt’s first business groups included manufacturing and nonmanufacturing industrial ventures. Many of these efforts involved cooperative links with international interests. The Misr group, the ‘Abbud group and other coalitions emerging after 1922 continued this pattern of selective collaboration with foreign capital. At the same time, they created new industries in Egypt and advanced local control (the Egyptianization) of existing sectors. They competed with one another for control of these ventures.

The chapter begins by analyzing the origins of Egypt’s first local business groups and the role that these businessmen envisioned for foreign capital and for manufacturing industry in the evolving political economy. Through their plans for limited diversification, these investors charted a course for new sets of Egyptian competitors. The continuities are plainly evident in the record of the ‘Abbud group. The discussion thus turns to the rise of ‘Abbud Pasha and the ‘Abbud group of companies. I review the origins of his business career in the Egyptian construction sector and the diversification of his holdings during the interwar period, 1924–1939. During this period of sharp competition for limited public resources ‘Abbud consolidated his position as a major new force in the local political economy. The chapter concludes with a discussion of the institutional bases of power of the ‘Abbud group and its competitors in the interwar market.

The main argument can be summarized as follows. Until now, our views of ‘Abbud and his rivals have had little basis in the actual institutions, interests and activities of these local investors. In particular, the tendency to discount investors as a political force stems from a false and indefensible assumption: that these interwar capitalists or some subset of them tried to industrialize and transform Egypt but failed. Analysts differ mainly in identifying who (or what class segments) pursued these objectives and who (or what social forces) stood in their way. The conclusion is nonetheless the same. Capitalists did not have the political resources necessary to promote their interests. This conclusion is not surprising, given how boundless we imagine those interests to have been.

Replanting Egyptian Industry: The Cotton-Export Economy and the Emergence of Domestic Business Groups

Following the collapse of Muhammad ‘Ali’s system of state monopolies and manufacturing ventures in the 1840s, the weight of economic activity in Egypt shifted toward commercial agriculture, where the local dynastic state-in-formation (Egypt was still officially a province of the Ottoman Empire) had overseen innovations in support of production of a high-value export crop—cotton. From the mid-1800s on, fortunes rose and fell in Egypt on the strength of the prices commanded by its prized, long-staple fiber in the world market.^[1] The British occupation in 1882 led to a series of administrative, economic and fiscal reforms that deepened commercialization of land, cotton-export production and capital accumulation.

Two points need to be stressed about the sociology of those who appropriated the surplus in this economy. First, it is conventional to stress the dominance of “foreign” capital in this period by concentrating on the national origins or communal identities of individual owners, company directors and managers operating in various sectors. But when foreign capital is defined in this way, the French-based commercial giant, Crédit Lyonnais, is indistinguishable from the locally organized J. N. Mosseri Fils et Compagnie, a commercial bank founded by a family resident in Egypt since the mid-1700s. The Mosseri firm and its owners are an institutional expression of local capital in nineteenth-century Egypt.^[2]

The identities of these local investors were undoubtedly complex. For example, the Mosseris were legally foreigners rather than Egyptian subjects. Though born and raised in Egypt, at some point in the nineteenth century members of this family obtained Italian passports, which gained them competitive advantages under the terms of the international commercial regime in force in Egypt and other parts of the Ottoman Empire (the Capitulations). Their communal identity, meanwhile, was Jewish. The vice-presidency of the organized Cairo Jewish community was a hereditary position held by the Mosseris for decades. (Shamir 1987; Krämer 1989: 41–43) The emphasis on nationality or communal identity has tended to obscure the role played by these local capitalists in the development of industry as a subsidiary sector of the agroexport economy.

The second and related point concerns the usefulness in distinguishing between a class of large landowners, on the one hand, and an urban bourgeoisie, on the other, in narrating the history of the country’s local manufacturing sector. There are, of course, well-established grounds for doing so in the Egyptian case, whether these grounds are marxist ideas about modes of production or the collective sociological profile of Egypt’s early-twentieth-century national governing elite. Nonetheless, virtually all large-scale industries of local origin were steered by families with vested interests in the agrarian structure. Fortunes accumulated during the boom of the 1860s were used to buy land. Rural rents funded commerce and, later, industry. In other words, it was a merged set of leading landlord-capitalists that supported import-substitution manufacturing investment.

At least two distinct coalitions of local investors emerged in the prosperous postoccupation decade of the 1890s. The first included local Jewish families, Suarès, Cattaoui, Menasce and Rolo, closely linked by marriage and by investment activity.^[3] I will refer to this coalition as the Suarès group because Raphael Suarès (1846–1902) fronted for these families in a series of spectacular, turn-of-the-century joint ventures with French and British financial syndicates. The holdings of these families included massive private agricultural estates, rural land-development ventures, urban real estate, numerous private and joint-stock banks, public transport, urban services, and textiles.

A second group involved leading members of Alexandria’s large Greek community, the Salvagos, Sinadino, Zervoudakis, Choremis and Benakis families.^[4] The diverse activities of the Salvago group, as it was referred to in the Egyptian press, came to encompass cotton export and finance, private estates, rural-development companies, urban real estate and commercial ventures (e.g., warehouses), public utilities, transport, insurance, textile manufacturing, petroleum marketing, and, eventually, chemicals and metallurgy (Akhbar al-Yawm, 13 November 1948). Their economic roles proved no less complex than the other components of these local investors’ identities.

Tignor (1984: 72–73) includes Mikés Salvagos among Egypt’s “foreign industrialists” and highlights his role as a founder of the Association of Industries in 1922. At the time, Salvagos served as chairman of the boards of Filature Nationale d’Egypte, then the country’s largest textile enterprise, the Alexandria and Ramleh Railway Company and the Alexandria Water Company. At the same time, however, Salvagos sat on the steering committee of the Alexandria General Produce Association, an institution comprising “large export houses, bankers and merchants” that privately regulated the cotton trade (Tignor 1984: 58; Papasian 1926: 300; Pilavachi, 1932). Kitroeff argues that it is misleading to label bankers and exporters like Salvagos “industrialists” (1989: 82–83, 122). Meanwhile, the Salvagos family owned an estate totaling 2,000 faddans, which qualifies them for inclusion in the lists of Egypt’s top landowners. Localcapitalists like Salvagos, Suarès and their allies cooperated closely with foreign capitalists in many of the biggest ventures of the period. The Suarès group built their Egyptian commercial empire through alliances with competing European financial powers. These alliances can be seen in the period of expansion of the group’s holdings between 1880 and 1907. In the first major joint venture, the Suarès group and a consortium of French banks founded the Crédit Foncier Egyptien (1880), which proceeded to dominate mortgage banking in Egypt (Crouchley 1936: 34; Owen 1969: 277; Collins 1984: 43–45; Tignor 1989: 86). The power exercised by Raphael Suarès and his allies on the local board proved a central concern of the French embassy, increasingly so as local investors gradually gained control of a majority of the internationally traded shares (Tignor 1989: 86–87).

“Privatization”

The Suarès group benefited enormously from a massive transfer of ownership rights carried out by the Cromer regime (1883–1907), which paved the way for these investors’ expansion into new economic sectors. For instance, in 1888 they received a concession from the government that ceded to them the state-owned Tura-Helwan railway, south of Cairo, and granted them permission to extend the line north into the city center at Bab al-Luq (Krämer 1989: 41; Kalkas 1979: 230; Wright and Cartwright 1909: 183). This venture led to a series of further transport enterprises, including the private financing in 1895 of the last segments of the railway line running from Cairo to Aswan in cooperation with the German joint-stock bank, Berlin Handels Gesellschaft. Once it was built, the Suarès group leased the line back to the Egyptian State Railways (Krämer 1989: 41; Kalkas 1979: 231; Platt and Hefny 1958: 338)!

In the late 1890s, investors scrambled to obtain the rights to run light railway lines in the Delta. The Suarès group won the concession for the three eastern governorates of Sharqiyya, Dhakhaliyya and Qalubiyya. Competitors included a British financial syndicate and a Belgian holding company known as the Empain group, which built and managed railways and tramways across Europe, Asia and Africa. In 1900 the Suarès group sold their concession to the British interests and joined the board of the competing, London-based Egyptian Delta Light Railways Ltd. (Wright and Cartwright 1909: 183–186; Krämer 1989: 41; Kalkas 1979: 174). The transport markets of Cairo and the Delta were thus effectively divided between two forces. The Suarès-British joint venture ran light rail lines in most of the Delta as well as the Cairo-Helwan line. Independently, the Suarès group ran the donkey carts that crossed the Musqi quarter and that were known colloquially as “siwaris.” The Empain group operated a light railway in the eastern Delta connecting Mansura to the coastal towns of Dumyat, east of Alexandria, and al-Manzala, near Port Said. More significantly, the Belgians also built and operated electric tramway lines in Cairo.

These transport ventures were only one component of larger, privately directed urban-development schemes that changed the contours of Cairo. The Suarès group and their British partners created a second firm, the Egyptian Delta Land and Investment Company (1904), which developed the suburb of Ma‘adi along its Cairo-Helwan line. While building the rail lines, the Suarès group also developed public-utility companies in Tanta, the third largest city in Egypt, and Mansura, another market city serviced by the Delta rail system. They eventually took over the Cairo waterworks as well. These various urban real estate ventures paled, however, beside the development scheme promoted by Empain and allied European financiers.

The Brussels-based investors constructed an entire new community in the desert northeast of Cairo—Heliopolis—linked by the new tramway line. The population reached 24,000 by 1928, and Empain’s various companies controlled transport, power, utilities, and eighteen thousand faddans worth of commercial and private real estate by mid-century. In 1906 the Empain group set up a holding company, the Cairo Electric Railways and Heliopolis Oasis Company, which, in turn, held controlling shares in various related companies—for instance, the Société Egyptienne d’Electricité (1929), which built and operated the original Shubra power station (Levi 1952: 314).

The close control exercised by the Belgian administration left little room for local capital to operate, in contrast to the situation in foreign-financed development projects associated with the Suarès group. In the interwar period, the Belgians would fight hard to prevent Egyptian investors from breaking the monopoly on the Cairo transportation and power markets. At best, local capital acted on the periphery of the Empain group’s urban fiefdom, at least until the end of World War II. The prime example is the set of construction, urban real estate and land-development ventures involving the local (Belgian) contractor Leon Rolin and two Syrian business families—the Eids, who were Belgian protégés, and the Shakours (Tignor 1980a: 423, 429; Wright and Cartwright 1909: 115–16, 312–13, 397; Philipp 1985; Papasian 1926). Their interlocking firms included the Egyptian Enterprise and Development Company (1904), the Cairo Suburban Building Land Company (1906), the Koubbeh Gardens Building Land Company (1907), the Gharbieh Land Company (1905) and La Société Agricole de Kafr al Dawwar (1907).

The tremendous expansion of Alexandria in the 1880s and 1890s proceeded in similar directions: the bankers and exporters financed urban transport, land development and, lastly, manufacturing industry. Development took place in an unregulated environment overseen by a business-dominated municipal government whose autonomy was sanctioned by statute (el Saaty and Hirabayashi 1959: 218). The Salvagos and allied families played prominent roles, together with European-based capitalists, in many new ventures, including the Egyptian Salt and Soda Company (1899), which was a state-sanctioned monopoly, and the Filature Nationale d’Egypte (1899, reorganized 1911), the first textile firm to obtain even minimal government support (Owen 1966 and 1969: 222–223; Tignor 1989) Salvagos also held a large stake in the locally controlled Société Anonyme du Béhéra (1880, reconstituted 1894), which, supported by government dredging contracts, grew into one of the largest companies developing the farm land of the Delta (Baer 1962: 68–69, 124–127; Owen 1969: 212, 281; Kitroeff 1989: 82).

The Cassel-Suarès Group Joint Ventures

While the ruling authorities thus encouraged and facilitated capital investment and private control of urban development, this new division of labor received its fullest expression in the sale to Suarès and various partners of prime agricultural lands in the Delta and Upper Egypt, along with the state-owned sugar mills. The Suarès group, which in the 1880s operated the refinery in al-Hawamdiyya, joined with French investors in a second enterprise in Upper Egypt (Owen 1969: 277; Kalkas 1979: 169; Tignor 1984: 34). The Suarès group originally held the controlling (66.6 percent) share in the joint venture, but consolidation and expansion of these various sugar-manufacturing operations involved new capital shares traded on the Paris bourse. The merger in 1897 led to the creation of the Société Générale des Sucreries et de la Raffinerie d’Egypte, the largest industrial firm in Egypt. The giant refinery operation absorbed all of the state’s own manufacturing facilities by 1902 (Crouchley 1936: 114; Owen 1969: 296; Collins 1984: 70; Tignor 1989: 87–88; Krämer 1989: 40).

Not surprisingly, the Suarès group devoted considerable time, energy and capital to land development in Upper Egypt, where most of the cane was grown. Once again, they joined forces with foreign financial capital in a venture sanctioned by the governing authorities and resting basically on the subsidized transfer of three hundred thousand faddans of state-owned lands. The unprecedented giveaway amounted to a quid pro quo for the assistance that Ernest Cassel, one of the most powerful international financiers of the era, provided the government (i.e., Lord Cromer) in the construction of the Aswan Dam (1898–1902). Cromer, who backed the dam project as a chief means to develop Egypt’s irrigation system, could not obtain the release of the funds from the multinational commission in charge of the Egyptian treasury. Cassel, whose closest business associate was Cromer’s brother, Lord Revelstoke, the director of Baring Brothers, arranged private financing for the dam. He was amply rewarded.^[5]

In 1898, Cassel, the Suarès group and the French partners in the sugar-manufacturing venture formed the Daira Sanieh Company. The state sold them what remained of the former Khedive Isma‘il’s properties, much of it in Middle and Upper Egypt. As Collins notes, “The false claim was made that the Daira Saniyya was losing money and should therefore be sold off as the best means of stemming a fiscal hemorrhage that might eventually drain the Egyptian government treasury” (1984: 351). The company purchased the land for £E 6.4 million and between 1900 and 1906 sold three hundred thousand faddans for £E 13 million. The investors’ share in the profits totaled, minimally, £E 3 million (Baer 1962; Owen 1969: 268–269; Collins 1984: 347–353). The board of this lucrative venture comprised a remarkable alliance, including Cassel’s business partner, Carl Meyer; Paris bankers; the recently retired financial adviser to the Egyptian government, Elwin Palmer; members of the Suarès group; and one of the most powerful Egyptian landowners of Minya province, ‘Ali Sha‘rawi (British Chamber of Commerce 1905: 11, 50).

The lines of competition and cooperation grew increasingly dense and complex. Cassel and his partners gained an important interest in the Société Générale des Sucreries et de la Raffinerie d’Egypte in 1902 by financing the firm’s purchase of the state’s refineries, and they played a major role in the reorganization of the company when bankruptcy threatened in 1905. The new management team included the Belgian expert, Henri Naus, who in later decades became a leading spokesperson for local industry. In addition, Victor Harari, a Finance Ministry official, went to work for Cassel and his allies in 1905 in the sugar company and the closely linked Société Anonyme du Wadi Kom Ombo (est. 1904), an enormous agricultural company in Aswan province. At the same time, a French-Suarès joint venture, the Crédit Foncier Egyptien, took over the Daira Sanieh Company, in a move apparently intended to preempt Cassel’s entry into Egyptian mortgage banking (Owen 1969: 291; Tignor 1984: 34 and 1966: 369–373; Berque 1972: 246–247; Thane 1986). Existing studies only hint, in a frustratingly vague way, at the conflicts which underlay this tremendous extension of private wealth and power.

Through such familiar institutions as officially sanctioned private monopoly over public service, subsidies, appropriation of state resources, and direct pathways from government ministry to company board, investors built capitalist enterprises in Egypt. Local investor coalitions like the Suarès group played central roles in virtually every major financial, commercial and industrial enterprise of the era. They all but obliterated the lines distinguishing public and private, foreign and local, through such operations as the National Bank of Egypt, founded in 1898 by Cassel, Suarès and the Alexandria-based Salvago group (Crouchley 1936: 32; British Chamber of Commerce 1905: 24; Kalkas 1979: 276). Tignor tellingly summarizes developments in this post-1882 period by noting “a marked forging of interests between the administration and the financial community” (1966: 369).

Business Groups and Industry

The developments mapped here are important for three reasons. First, they highlight basic institutional features of the business community in Egypt, including mechanisms underpinning its privileged position. Whatever the motivations of individual British administrators, or the power of the London and Paris bondholders, or Cromer’s expectations about the pressures that might be exerted by the Lancashire textile lobby, the post-1882 governments needed the cooperation of the business community to realize all their basic economic objectives. Cromer, the ruler of Egypt from 1883 to 1907, transferred assets and authority in many domains from public to private hands. The business community enjoyed minimal state interference: the construction industry was unregulated, the cotton exporters supervised their own affairs, while the private Khedivial Agricultural Society served in place of a governmental ministry of agriculture until 1910—this in a country where export agriculture was the basis of national wealth.

The business group—individuals and families organized as coherent coalitions of investors—emerged as an important form of autonomous capitalist organization during the period 1880–1900, coinciding with the consolidation of local capital generally as a political-economic force in Egypt. My basic portrait and periodization depart from conventional accounts, which have been concerned above all with the foreign communal or ethnic identities of these early investors and company directors. These accounts either collapse the distinction between local and foreign capital in this period or else portray these local capitalists as compradors, serving the interests of foreign capital.

The second reason for mapping these early, pre-World War I institutional developments is to clarify the specific role played by these business groups in various economic sectors, especially their early investment activity in industry. Cromer’s infamous refusal to accord protection to the first two modern textile ventures started in Egypt in 1899 is generally seen as an expression of the strength of the social forces opposing local industrial development, articulated and led by the top administration of the state. The local business community had supposedly not yet shown meaningful signs of an ability to express common interests and to act in defense of the national economy. Local (“national”) capital, equated narrowly with industrial interests, only begins to emerge in 1917, 1922, 1936 or even 1952, according to various interpretations.

The depth of opposition to Cromer’s policies belies the arguments about the delayed birth of local capital. As Owen pointedly notes about Cromer’s actions against the textile firms, they were “criticized by almost all sections of Egyptian [sic] opinion,” attacked by the main newspaper of the business community, La Bourse Egyptienne, and initially struck down by the Mixed Courts. Once Cromer orchestrated the reversal of the judiciary’s decision, the action “was attacked as detrimental to the country’s interests even by the Egyptian Gazette, normally the most staunch supporter of the Occupation.” It would seem that, in fact, the organized voice of local (though overwhelmingly non-Egyptian) business could be plainly and loudly discerned. Criticism of the British attitude to the development of local industry continued unabated for the remainder of the period up to 1914. Crucially, by the end of his rule, Cromer found it necessary to push aside his own cherished principles of free trade long enough to intervene on behalf of the tottering sugar-refineries joint venture (Owen 1969: 343–344). Cromer’s successors continued in this same direction.

The crash of the Egyptian market in 1907 catalyzed a number of important developments as government officials, landowners and leading local businessmen responded to the crisis. The Suarès group gained vital exemptions for their nascent textile-manufacturing joint venture, while the government created the Ministry of Agriculture between 1910 and 1912 in response to plummeting export prices and a disastrous cotton harvest. Businessmen engaged in new forms of collective action, founding at least two new interest associations in this period: the Property Owners Association (1911) and the Egyptian Chamber of Commerce in Cairo (1913). Members of the Suarès group played prominent roles in both (Owen 1969: 223, 346–348; Berque 1972: 243; Deeb 1978: 17–18; Tignor 1984: 60–61). Finally, the economic crisis gave impetus to a more forceful and sustained articulation of the need for economic diversification, including the expansion of local industry.

The most powerful constituents of the nascent industrial lobby in Egypt were simultaneously the country’s richest bankers, largest exporters of cotton, main investors and directors in numerous foreign-backed ventures and, through the extensive network of interlocking transport, irrigation, and land-development companies, some of the largest landowners as well. They successfully integrated these diverse interests, and, not surprisingly, the subsidiaryrole envisioned for industry in Egypt complemented rather than undermined their investments in the agroexport economy. The multisectoral investment model that they pioneered remained the basic institutional form of the largest Egyptian capitalists for at least the next half century. These powerful coalitions, and thus the business community as a whole, even had the capacity to weather the storm of Egyptian nationalism which swept the country in the years leading up to the 1919 revolution.

The third reason for mapping these investor coalitions carefully is to clarify the role they played in cultivating or accommodating Egyptian-Muslim economic elites and promoting the fortunes of rising new Egyptian business stars. One example is the ascent of the Yahya family, landowners and merchants prominent both in Alexandrian private (business) and public (municipal-council) spheres, as well as in the emerging Egyptian nationalist movement.^[6] Amin Yahya sat on the landmark 1916 Commission on Commerce and Industry (the Sidqi commission). So did Harb, the fastest rising of the Egyptian businessmen and landowners associated with the Suarès group from 1905 on.^[7] Others included families like Sultan, Sha‘rawi, Siyufi and Lutfi.^[8] All had ties to local or foreign capital and, with the exception of Lutfi, would join with Harb, as well as with key members of the Suarès group, in the historic founding of Bank Misr in 1920. Harb was throughout the 1910s and 1920s probably the most effective publicist among Egyptians of the industry-building strategy advocated by “foreigners” like Suarès, Cattaoui, Salvagos, Naus, Rolo and Barker, the backbone of the local business community.

Manufacturing: The Nonrevolution

Before turning to the post-1922 period and the rise of the ‘Abbud group, we must be clear about the nature and timing of the industry-building project associated, perhaps too prominently, with the political and economic ferment of the years surrounding Egyptian independence. These limited initiatives at economic diversification were steered by businessmen who remained thoroughly integrated into international circuits of capital. Yet, they are routinely described as a strategy aimed “at stimulating industrial growth independent of European capital and intervention” (Krämer 1989: 94, emphasis mine). Historians use three key events to anchor this interpretation and to pinpoint the birth of a national industrial bourgeoisie. The first is the creation of the Commission on Commerce and Industry, which issued its public report in 1918. The second event is the creation of Bank Misr in 1920, a commercial bank owned exclusively by Egyptian citizens. The third landmark is the formation of the Association of Industries in 1922 (Issawi [1967] 1975: 452–460).

The basic problem with this projection back into the past of post-1952 anticapitalist discourses is that no one has convincingly shown that businessmen ever organized and acted on the basis of the goal of autonomous industrialization. This was certainly not the project articulated by the Sidqi commission. It was not the investment model pursued by the local capitalists and landowners who steered Bank Misr (or any other business groups for that matter). And it was never advocated by the leadership of the Association of Industries. It is worthwhile looking briefly at these three important institutions, then, to see how investors actually defined the place of industry and foreign capital in the evolving political economy and operationalized this project.

The Sidqi Commission on Commerce and Industry

In 1916, the Egyptian cabinet assembled a nine-person mixed committee of businessmen and government officials to assess the impact of the war on the domestic political economy and to make policy recommendations for the postwar era. The committee was chaired by Isma‘il Sidqi, a rising star in the administration whose career had been momentarily stalled by public scandal. The appointment helped to assure him a long and lucrative public life as the single most closely business-identified Egyptian politician of the 1920s and 1930s. Five leading businessmen served with Sidqi: Yusuf Cattaoui and his protégé, Tal‘at Harb; Amin Yahya, the Alexandrian cotton exporter; Henri Naus, the Belgian engineer who rescued the Cassel-Suarès group sugar-processing joint venture; and F. Bourgeois, a representative of the French international investment trust that owned the gas concessions for Egypt. Two British technicians working for the Egyptian government and the French commercial attaché rounded out the commission (Tignor 1977a: 162 and 1984: 56).

Their recommendations, included in the commission’s lengthy (1918) report, reflected many of the prevailing critical views on the economy and arguments about diversification, and can be read as a virtual précis of the investment strategies and political initiatives pursued by leading local capitalists in the next two decades.^[9] The commission outlined three basic objectives: (1) the gradual expansion of the roles of Egyptian labor, managerial staff and capital in the local economy; (2) the cooperation of foreign and local capital in a limited import-substitution diversification effort tied to processing of agricultural raw materials; and (3) a coordinated response to signs of social unrest during a period marked by an upsurge in labor militancy. They urged that capital be channeled into factories for paper goods, textiles, bricks, glass, processed foods and leather goods, as a way to absorb a part of the growing population. The commission meanwhile omitted any discussion of starting heavy-goods industries—machinery, agricultural equipment, etc. These industries were not part of the agenda. In the one case where creation of a technologically advanced manufacturing venture was advocated—namely, the call to set up a domestic nitrate plant—the initiative came from governing officials. Kitchener was already involved in direct negotiations with German manufacturing and engineering firms in 1912.^[10]

There was nothing ambiguous or mysterious about the call for foreign capital to participate in expanding Egypt’s manufacturing sector. First, foreign capitalists and representatives of foreign industrial powers served on the commission. Second, local business groups were already pursuing this strategy. Third, even the limited industrial diversification envisioned by the commission required increased involvement with metropolitan interests—for instance, in developing the necessary power resources, obtaining machinery and technology, and securing financing for the most ambitious projects. If a “common theme” of this report and related initiatives was “the loosening of the bonds of control exercised by metropolitan interests” (Tignor 1984: 55), then it is important to remember that local capitalists sought to do so even as they increased their involvement with foreign capital.

The program articulated by the Sidqi commission reflected the outcome of some three decades of change in the domestic and international market, as well as the investment opportunities made possible by these changes. In particular, the growth of engineering and heavy-manufacturing industry in the advanced industrial economies of Britain, France, Germany and the United States afforded opportunities for complementary expansion of manufacturing and nonmanufacturing industrial investments in countries like Egypt.

Local business groups, through their multisectoral investment strategies and strong international connections, narrowed the scope of conflict over competing sectoral priorities. Despite the claims in exceptionalist accounts, this limited industrialization project posed little threat to what is often envisioned as a formidable opposing bloc of foreign merchants and manufacturers. Many foreign commercial interests would profit handsomely from a limited degree of local industry building, namely those representing advanced manufacturing and engineering sectors, heavy-equipment producers, contractors, electrical-supply firms and those banking interests allied to heavy industry. And no one has yet provided evidence that the Sidqi commission and the early investment initiatives that followed faced any kind of serious, sustained and systematic opposition by either domestic or foreign rivals. Mostly these efforts were ignored or else treated patronizingly. This benign neglect would only change with the gradual realization that British firms were losing their longstanding comparative advantage—political and economic—in the Egyptian market.

The Bank Misr Group

All the points made above are reflected and reinforced in the investment activities of the Misr group, the set of businessmen and landlords led by Harb who founded Bank Misr in 1920. This new business group linked its fortunes to the conservative wing of the national movement, gained privileged access to the post-1922 Egyptian state, and used its political influence to establish the group as a serious competitor in various economic sectors. The bank’s managing director and vice-chairman were authors of the 1918 commission report, and, not surprisingly, they adhered closely to the agenda set by the Sidqi commission. For instance, in his public pronouncements, Harb rightly extolled the bank’s preferential hiring policy and its principle of selling the bank’s shares only to Egyptian nationals. In the privacy of the boardroom, Harb and his allies mapped an orthodox multisectoral investment strategy that included selective cooperation with foreign capital.

The history of Harb and the bank constitute the core of the Egyptian colonial-exceptionalist narrative. Beinin and Lockman (1987) capture the essence of this narrative in their description of the investors’ attempt to create a “completely independent national industrial bourgeoisie.” What ostensibly most distinguishes them from other investors is their opposition “to collaboration with foreign and mutamassir [literally, Egyptianized] capital” (1987: 11). Nonetheless, empirical problems abound in this view. After all, Yusuf Cattaoui, Harb’s employer, mentor and the original vice-chairman of the bank, along with another member of the ten-person board of directors, Joseph Cicurel, were themselves two of the most prominent “Egyptianized” leaders of the business community.

As I showed above, Harb and the other key figures in the Misr group had longstanding ties with foreign capitalists and firms that they never abandoned. Instead, Harb expanded his foreign connections. By 1924, he had joined the board of the Crédit Foncier Egyptien, the joint venture with French finance which was the earliest and most important symbol of foreign involvement of the agroexport economy. Harb and his partners in the Misr group would join the boards of other firms as well as explore and initiate their first institutionalized cooperative ventures with foreign capital in the period 1924–1929. Unfortunately, analysts have continued to employ a naive and sentimental model of Bank Misr, elaborating the factors that ultimately led the Misr group to collaborate with foreign capital, while mourning the loss of the bank’s independence and the “purity of the ethos with which it was born.”^[11]

The objectives that Harb and other business leaders publicly articulated before, during and after the 1919 revolution—expansion of industry, diversification of the economy and enhanced local control—were at best broad, abstract and partially conflicting ideals that capitalists continuously had to reconcile and operationalize through their private investment strategies. Local businessmen understood this, and the versions of nationalism that different Egyptian investors championed proved flexible enough to accommodate shifting and pragmatic assessments of interest.

The public expressions of economic nationalism associated so prominently with the Misr group’s chairman, Harb, proved equally useful to Harb’s local Egyptian rivals, especially in trying to obtain political support for their various enterprises. There were no obvious penalties involved in doing so as long as economic nationalism was the discursive monopoly of capitalists or intellectuals who did not challenge the legitimacy of the prevailing private enterprise–oriented economic order. Harb, along with Yahya, ‘Abbud and others, remained free to pursue strategies of selective cooperation with foreign capital. Business nationalism strengthened the competitive positions of local capital—Egyptian and non-Egyptian both—vis-à-vis potential foreign partners, even while Egyptian nationals could use it to advantage in neutralizing some of the well-known competitive advantages that had accrued to local foreigners. In sum, Harb’s public-relations campaigns benefited, if unequally, a diverse range of local investors (Owen 1981b).

The Association of Industries

Local investors founded the Association of Industries in 1922, I would argue, in order to better monitor sectorwide developments and to continue to secure a degree of cooperation among a growing number of competing firms. Other institutions also played a role in controlling the level of business conflict. The cross-sectoral holdings by groups was one. The quasi-public National Bank of Egypt, on whose board sat representatives of the main business groups, was another. All other things being equal, however, diversification made it difficult to continue to rely exclusively on these narrowly based institutional forms of cooperation.

The forms of economic nationalist discourse favored by some of the founders and spokesmen of the association have been reproduced too unreflectively in those accounts that describe its purpose “primarily to represent the foreign residential business community…threatened by a renewed influx of European manufacturers” (Tignor 1984: 72–73). If true, then what would have compelled nonmanufacturing firms such as the Empain group’s giant power and transport company to join such an organization? Many if not most of the association’s original members were not manufacturers. The sectors with the largest number of firms and the first to organize their own sections within the association were shippers and contractors, neither of which gained from reducing the volume or increasing the costs of imports.

Shipping and contracting firms were, however, affected as much as textile manufacturers and the tramways by a steep rise in labor militancy. Workers who had been mobilized in the nationwide demonstrations in the spring of 1919 remained active in the streets and on the shop floors. Industrial firms in fact faced an unprecedented level of strike activity between 1918–1921, a “mushrooming” of union organizing, the birth of a precocious labor federation and the creation of the country’s first socialist party (Deeb 1976: 74; Beinin and Lockman 1987: 83–158; Bianchi 1989: 68–69). Yet this most basic dimension of industrial policy has been given little weight in explaining the origins of an association (renamed the Federation of Industries in 1930) that aided employers in the strong front they maintained for twenty years against union and welfare legislation.

Since most of the original members of the association carried foreign passports, analysts have found it important to stress that the interests of the Misr group’s founders only partially overlapped those of the association as a whole. This is equally true for every other member firm in the association. Without clarifying when and how this mattered in the specific arenas in which the association acted, this claim conveys no useful information. It is asserted only because Harb’s rise by 1925 to a leadership position within the association itself so clearly contradicts core beliefs about the Misr group’s alleged original raison d’être or the deep gulf between Egyptian and non-Egyptian identities that is fundamental to exceptionalist accounts of capitalists and politics.

There is little solid information behind discussions of the Association of Industries in the secondary literature. The standard description of this institution as a powerful and effective pressure group tends to rest more on repeated assertion than rigorous demonstration. While collective representation to the state in the name of the association’s membership was one of its functions and doubtless took place, this function should not be exaggerated. A multisector association had little need to lobby in an unregulated economy, though it could serve as a mechanism for self-regulation by investors. Assume that business leaders wanted to preserve the oligopolistic structure of the local market that British rule had helped to institutionalize. The association could help in reducing the information and enforcement costs associated with the oligarchs’ preferences for price fixing, cartelization and labor control (Bianchi 1989: 69).

Rethinking the Nationalist Model of the Egyptian Business Community

These important initiatives between 1916 and 1922 reflect developments in the political economy dating back to the 1890s. A number of families linked together in investor coalitions or business groups emerged as central units of accumulation in the domestic political economy. These groups and their allies held leadership positions in every economic sector: agriculture, urban real estate, mortgage banking, cotton export, construction, power and transport. These same investors took the lead in promoting the development of local manufacturing as a subsidiary investment sector. The outlines of this limited diversification strategy emerged between 1907 and 1912, having weathered fitful opposition from the British authorities in control of the state and having received authoritative endorsement in the commission report of 1918. It remained the basic strategy underpinning public and private investment in manufacturing industry until the 1950s.

The above summary overturns all the key premises of the Egyptian exceptionalist narrative. Industrialization, as envisioned by the investors who steered the Egyptian economy, was not an outcome of the 1919 revolt. This limited industrialization project did not fail. Nor did landlords, “commercial capitalists,” “metropolitan interests” and, in particular, business nationalists like Harb challenge it. To the contrary, Harb played a key role in articulating basic objectives of the business community in nationalist terms. It is therefore not surprising to find that, during his most outspokenly nationalist period, foreigners in Egypt continued to cultivate Harb, encouraged his investment activities and even joined him in his Bank Misr venture in 1920. Rather than Harb and the Misr group ceasing to pose a threat to dominant forces in the local economy in the 1930s as they increased their involvement with foreign investors, he and the other Egyptian business nationalists only began to pose a threat at that time, as these new groups demonstrated increasing influence over markets and politics.

The basic objective of the Misr group and all other post-1922 Egyptian investors was profit or, even more preferable, rent. “We are so accustomed to associate the beginnings of the Misr enterprises with the progress of nationalism, and indeed with the progress of the nation, that it is somewhat piquant to set them against their diminished context” (Berque 1972: 337). Rent seeking yields a far less exalted image than conventional portraits of bankers seeking to challenge European economic hegemony. It does, however, resolve many of the conventional paradoxes, including inexplicable complexities in the personalities of businessmen like Harb who, while “hostile” to foreign capital, served on the boards of the biggest foreign-owned firms in Egypt; as well as an “industrialization” drive that led industrialists to plow their profits into the cotton-export sector.

Since, as these investors realized, it is intensely difficult to mobilize public support for the objective of private enrichment, Egyptian business groups viewed and promoted all their ventures as contributions to strengthening the national economy. Nationalism was especially important when market competitors needed or were forced to take their private conflicts to the public. Attempts to build political coalitions in support of various commercial ventures could not, after all, be based on the narrow claims of profits that were to be amassed in the course of building dams, pumping stations, factories and power plants. Instead, investors appealed to the national interest, challenged the “Egyptian-ness” of particular competitors, protested the undue interference of the British residency, hinted at foreign conspiracies that threatened Egyptian sovereignty, etc.

Business nationalism strengthened the competitive positions of these new investors who were operating within a partially transformed domestic order and a changing international-sectoral division of labor. The new Egyptian investors adopted the multisectoral investment strategies of the earlier business groups and rapidly advanced to commanding positions within the evolving political economy. Egyptian coalitions like the ‘Abbud, Misr and Yahya groups gained access to state resources, took over lucrative concessions, enterprises and markets, and expanded the local manufacturing sector of the economy. There is little mystery, variance or inconsistency in the actions of local investors before and after the 1919 uprising. Ongoing relations with foreign firms, state agents and local rivals were based on costs, benefits, risks and rates of return.

The Rise of the ‘Abbud Group

In 1924, the Glasgow-trained Egyptian engineer Muhammad Ahmad ‘Abbud started a private contracting company that in the space of two decades evolved into a sprawling business empire. By the 1940s, ‘Abbud was regularly being referred to in the press and similar accounts as Egypt’s most “successful” or most “powerful” businessman and the country’s leading “industrialist.” At its height, the ‘Abbud group operated in construction, textiles, trade, fertilizer manufacture, sugar processing, urban and rural real estate, tourism, banking, transport, shipping and insurance. ‘Abbud owned a vast estate in Armant, in Upper Egypt. In addition, he was the single largest shareholder in the giant Bank Misr conglomerate, and he successfully fought his way onto the board of the rival group’s bank-holding company by 1950. At the same time, he became the first Egyptian businessman to gain a seat on the board of the Suez Canal Company. In the aftermath of the military coup d’état of July 1952, ‘Abbud had made plans to extend his investments in import-substitution manufacturing sectors (chemicals, paper manufacture) and mining (oil); instead, the series of nationalizations between 1955 and 1963 ended ‘Abbud’s role in Egypt’s economic life. His family had to flee the country.

The phenomenal rise in this upstart Egyptian capitalist’s fortunes inevitably spawned antagonisms, not least among his local competitors, and for most of his career ‘Abbud stood squarely outside of the business establishment. The composition of the steering committee of the Federation of Industries is a case in point. Despite ‘Abbud’s prominence in the largest affiliated body, the Chamber of Public Works Contractors, and his growing weight in industry generally, he was kept off the board until the 1950s. However, his Egyptian rivals, Harb and Yahya, as well as Sidqi, the politician and tireless spokesman for the private sector, were all prominently identified with the peak association soon after its founding.

For his part, ‘Abbud did little to narrow the gap that divided him—socially and culturally—from Europeanized bourgeois circles, on the one hand, and from Egyptian-Islamic bourgeois networks, on the other hand. Instead, ‘Abbud flaunted his success, publicized his wheeling and dealing, spent his profits liberally on mansions, speed boats, plantations, parties and sojourns to Europe. He regularly boasted of and exploited his power and influence with both the Egyptian palace and the British Parliament. He provided newspapers with good copy and an occasional scandal. Established Cairene and Alexandrian society either laughed or blanched at such blatant status seeking. At the same time, he was married to a Scottish national, had a highly Westernized life style and played little part in Egypt’s Arab-Islamic cultural life. In the wake of the 1919 revolution, his many professional and personal connections with the British community in Egypt were hardly welcomed by the more uncompromising sections of the independence movement. His investment in business nationalism—evinced, for instance, by his support for Zaghlul, his denouncement of the Capitulations, his philanthropy and his involvement in the founding of the National (Ahli) Club—did little to enhance his reputation. Intellectuals today still speak disparagingly of him as an Anglophile (Isma‘il Sabri ‘Abdallah, interview, Cairo, 4 June 1985).

While these factors contributed to the controversy surrounding ‘Abbud, his success as a capitalist was the primary cause of his notoriety. Behind his meteoric rise lay a ground deeply strewn with commercial rivalries and divisive political-economic conflicts. Competition was sharp for the contracts, concessions and subsidies upon which ‘Abbud and all other local investors depended. ‘Abbud’s accumulation strategy straddled markets and politics. His pursuit of profits via public-works projects led predictably to highly politicized forms of competition, including complex and shifting alliances with Egyptian politicians and party factions, multinational managers and foreign powers.

“Comprador” Accumulation

The construction industry is a well-known career path for many capitalists. Construction is a vital part of any national economy. Public works and other large projects consume a large part of scarce resources in developing countries, and the industry is a critical component of any development effort. At the same time, the characteristics of production in the industry that set it apart from mass-production manufacturing industry continue to assure relatively low costs for new entrants.^[12] In essence, a building or public-works contractor is an entrepreneur who organizes and assembles the various forces of production—capital, technology and the highly complex mix of labor skills—needed for building a particular structure.

The construction sector is well known in Egypt historically as a source for capital accumulation and, at a certain point, as the refuge for an eviscerated class following the Nasser regime’s assault on local capital in the 1950s–1960s. The industry harbored remnants of Egypt’s old bourgeoisie while enriching a new cohort of capitalists in the building boom that accompanied the liberalization of the economy in the 1970s–1980s. Waterbury describes the most recent cohort of Egyptian contractors as “masters of the public/private symbiosis” (1983: 181–183), though this characterization is hardly a peculiarity of the 1970s or of Egyptian political culture generally. In analyzing the course of Brazil’s arbatura (opening), Evans found that the construction sector was the single most important redoubt for local Brazilian capital during a period of increased penetration by multinationals and significant denationalization in manufacturing (1979: 143–158). The construction industry is a primary institution for a highly politicized form of accumulation in many late-developing capitalist economies, with examples ranging from the ‘Uthman group in Egypt to the Sutowo group in Indonesia.

A key mechanism is the politically mediated market in which the firms and their investors operate. State agencies are major clients for the industry. In many cases, public-sector demand accounts for as much as 50 percent of the construction sector’s output. Construction was probably Egypt’s largest urban industry (Owen 1972, Hanna 1984). Until 1922, European capital and local entrepreneurs of foreign origin virtually monopolized the industry through their access to finance, their superior technical capacity and their close ties to colonial state elites. Ahmad ‘Abbud represented one of the first Egyptians to compete successfully in this sector, beginning with contracts for canal dredging and, soon after, government orders for heavy machinery, industrial raw materials and electrical equipment from abroad. Until ‘Abbud launched his canal-dredging venture, the Alexandria-based Salvagos group had monopolized the field. Similarly, in the market for government equipment contracts, he competed directly with local capitalists like the Suarès group and the merchandising subsidiaries of British corporations, most notably, the Association of British Manufacturers (Owen 1969: 277; al-Musawwar 18 July 1952; Time 10 August 1953).

Like other investors, ‘Abbud needed political support in order to prosper. Great Britain’s qualified grant of independence to Egypt in 1922 improved the prospects for would-be indigenous capitalists by enhancing their access to scarce state resources. In other words, the collusive public-private circles that steered the political economy since the British occupation in 1882 were widened to accommodate middle-class Egyptians.^[13] In 1924, ‘Abbud obtained his first contracts from officials in the Ministry of Public Works and the Egyptian State Railways.

The boost to his business career was provided by the Wafd party (al-Musawwar 18 July 1952). ‘Abbud supported the party, and the party patrons, in turn, took care of supporters. ‘Abbud ran as a Wafdist in the 1926 parliamentary elections and served as a deputy for al-Tafih. In the following year, he began publishing a short-lived daily newspaper, al-Kashaf, on behalf of the party and its head, Zaghlul. The newspaper venture was likely backed with funds from the British industrial financier Dudley Docker, who had begun to collaborate with ‘Abbud in promoting an electrification scheme in Egypt (Davenport-Hines 1984b: 208).

The Logic of Collaboration

There is little mystery in why ‘Abbud or any other aspiring Egyptian capitalist chose to cooperate with foreign firms in supplying the state with capital goods and services. Few endeavors offered better returns to a capital-poor investor. The interesting question is why would foreign firms choose to cooperate with an unknown like him? What resources did a businessman like ‘Abbud bring to the bargaining table? A political connection of some type was essential, obviously, which explains ‘Abbud’s investment in the Wafd party. His value hinged initially on his ability to obtain contracts with attractive terms for his principals and, in the case of public-works projects, to organize the subcontracting. One of Docker’s representatives was quite explicit in appraising ‘Abbud’s value to electrical-equipment, railroad-car and steel producers. In a January 1926 meeting at the Foreign Office, he described the failure to secure any Egyptian business until appointing the little-known agent, ‘Abbud, who managed to obtain 1.2 million sterling in orders. ‘Abbud’s success, in turn, was attributed to the close links he had forged with the undersecretary at the Ministry of Communications.^[14]

Analysts tend to focus on the more pedestrian elements of such arrangements. Undoubtedly, favors such as kickbacks to individual bureaucrats were common. Capitalists always seemed to have a directorship or two in their companies reserved for retired officials. British administrators (e.g., Auckland Colvin, Elwin Palmer, William Willcocks) pioneered this particular career path in Egypt in the 1890s. The Wafd bosses or patrons probably also secured a measure of institutional support and material aid for the party through their clients. Yet the relationship in this case went beyond rent seeking on the part of bureaucrats.

By arranging to cooperate with international manufacturing giants like Metropolitan Vickers, ‘Abbud positioned himself strategically in multiple markets. He played an important intermediary role in the supply of physical goods, obviously. At the same time, he influenced the distribution of equally scarce, though less tangible, political resources. In the eyes of Egypt’s governing authorities, ‘Abbud’s business connections were access points to British society and ruling circles independent of the British residency and the Foreign Office.^[15] Such ties were clearly valued by Egyptian politicians. Their importance explains ‘Abbud’s participation in the delegation that accompanied the Egyptian prime minister, ‘Abd al-Khalaq Tharwat, during the ill-fated round of treaty talks with Austen Chamberlain in August 1927 (Vitalis 1990). It was the first of his many missions in London during the interwar period on behalf of various Egyptian political factions.

‘Abbud had quickly gained privileged access to the residency itself through his partnership with British capital. Given the central role which this institution continued to play in the domestic political economy, local businessmen and politicians naturally believed it to be another potentially useful point of leverage. The archives of the Foreign Office contain records of countless attempts by ‘Abbud to shape policies on his own and his allies’ behalf through the residency. In an early example, ‘Abbud had one of his British partners make the case for reinstating an official at the Ministry of Communications and sacking the head of the Egyptian State Railways. The British corporate capitalist based his argument on the serious threat to his company’s interests, which, in this case, neatly coincided with the preferences of the Wafd party’s leadership.^[16]

‘Abbud’s political investments supported his initial business endeavors as an intermediary in the delivery of goods and services to the state. His commercial success—measured by high returns and a rapidly expanding client list—strengthened his position with political authorities who, often grudgingly, found it necessary to deal with him. While his assimilation of British customs and tastes may have made relations with the residency easier, his business activities gained him access. The benefits that accrued through his initial collaboration with the export arm of British heavy industry included a rapidly and steadily increasing stock of resources—goods, money and information—valued by political leaders. The access and influence that he obtained in return strengthened his position in the local market. As the archival record makes clear, ‘Abbud bargained steadily and hard to extend his independent control over the construction projects and other ventures with which he was associated.

Egyptian aristocrats may well have been contemptuous of ‘Abbud’s “opportunism.” The British aristocrats rationalized the increasingly brazen political interventions and commercial coups of the Egyptian capitalist by resort to racism, paternalism and the consoling fiction that, above all, ‘Abbud was a loyal ally. Viewed from behind the desk of the Egyptian prime minister or the British high commissioner, ‘Abbud and his business rivals no doubt looked to be dependent on the state’s support and, hence, prone to its dictates. Nonetheless, the power of investors derived from their privileged position within the liberal market economy that the colonial state had built and post-1922 Egyptian governments preserved. To be sure, political authorities—from Lord Killearn to King Fu’ad—were vested with formidable prerogatives that capitalists, landlords and all other social sectors had to accommodate; but the limits to the reach of the state within the prevailing economic regime were clearly discernible. Thus, as I will detail in Chapter 3, “autonomous” British diplomats and Egyptian officials failed in their concerted efforts in the 1930s to sabotage ‘Abbud’s operations.

The Expansion of the ‘Abbud Group

If ‘Abbud’s business benefited initially from his investments in the Wafd party and pluralism, his career skyrocketed after he shifted his investments in support of the monarchy and authoritarianism. The political realignment took place following the death of Zaghlul in August 1927. ‘Abbud backed the losing faction in the contest for control of the party, weakening his position vis-à-vis rival business-political factions. He reaped huge windfalls from the switch in party tarbushes, however, landing lucrative orders for foreign manufacturers and fat commissions for himself. By the early 1930s, he was linked in one way or another with virtually every large public-works project sponsored by the Egyptian state. In less than a decade, ‘Abbud had established himself as a major force in the interwar political economy.

The contracting ventures provided the capital for expansion into new sectors in the 1930s. He and his coinvestors received the concession for a bus service in Cairo and gained control of the Khedival Mail Line, the old London-registered steamship service which had thrived on concessions from the colonial authorities. In 1938, ‘Abbud took over operations in another heavily state-subsidized sector, the sugar industry, which for decades had been the sinecure of the Suarès group and its French partners. At the same time, he and his own partners gained control of the Egyptian Commercial Bank and the Greek-owned alcohol distilleries in Tura. ‘Abbud also invested heavily in the rival Egyptian-controlled Bank Misr and, for a brief period, in a petroleum-supply company which he needed for his fleet of buses. Despite his best efforts, however, he failed to push through the group’s most ambitious industrial project: to electrify the Aswan Dam and use the energy to produce nitrate fertilizers, one of Egypt’s chief imports.

Conflicts over Industry

In 1927, ‘Abbud joined forces with an international consortium seeking new export markets in the intensely competitive, interwar heavy-electrical-goods industry. The group updated a plan first proposed on the eve of World War I to develop an indigenous nitrate industry by relying on cheap power from the Nile. They envisioned it as the first stage in a larger scheme for electrification of the entire country. ‘Abbud worked tirelessly to build a domestic coalition in support of the Aswan project, vying with his rivals for the scarce public resources needed for the power plant and factory. The decade before World War II was torn by increasingly intense and prolonged conflicts of interest among competitors, both across and within sectors. The outcomes determined where and when local business groups built industry. When war erupted in 1939, Egypt still had neither a hydroelectric plant nor a fertilizer industry in Aswan.

I will take up the Aswan case in detail in Chapter 3 in order to analyze the political capacities and strategies of the rival coalitions that were locked in a battle for control of these new sources of subsidized profit. At the same time, the analysis will allow us to see some of the underlying weaknesses in the administrative capacities of the interwar Egyptian state. To put the problem bluntly, there were few mechanisms in place to resolve the conflicts that accompanied the development initiatives of ‘Abbud, his allies and his rivals in the 1920s and 1930s. The diagnosis of the problem is confirmed by the efforts to restructure the relationship between public authorities and private interests, beginning in World War II, and the contests over the construction of a new regulatory regime.

Summary: Business Groups, Power, Industry and the State in Interwar Egypt

This chapter discussed some basic factors underlying the origins and rapid expansion of the multisectoral ‘Abbud group. In particular, it showed how ‘Abbud’s strategy of selective cooperation with foreign capital followed along the lines of the project of limited industrial expansion articulated by the leadership of the local business community in the 1918 Sidqi commission report. The report was itself a formalization and extension of the multisectoral investment strategies pursued for at least a generation by local investors. Similarly, in his reliance on and appropriation of state resources, ‘Abbud again continued along the best-known and least-risky route to private profit, power and privilege.

It should not be surprising, therefore, to find that other Egyptian capitalists among ‘Abbud’s cohort pursued similar strategies, most obviously, those like Amin Yahya and Harb who actually helped to formulate the Sidqi commission proposals. In other words, the investment strategy of the ‘Abbud group was indistinguishable from its better- known Egyptian competitors along three dimensions: reliance on public resources; cooperation with foreign capital; and holdings in multiple economic sectors. These were the basic, defining features of local capitalist organization in Egypt between 1880 and 1960.

The best example is provided by ‘Abbud’s most relentless competitor, the Misr group, led by Harb. The Misr group’s reliance on state business and subsidies in its initial 1920 commercial- banking venture and all subsequent enterprises is well documented. The group’s largest sectoral investments during the first years of operation were in cotton trading and textile manufacture. Its commitment to expanding domestic industry was undeniable, but so was its commitment to strengthening Egypt’s ties to the world cotton market. Thus the directors marked the bank’s tenth anniversary in 1930 by joining with foreign capital in a major cotton-export venture. Any minimally objective reading of the archival record of the Misr group’s activities during the 1920s would have to deal with the complexities immediately introduced to notions of the group’s interests or objectives by this multisectoral investment strategy.

The essential features of the Misr group’s strategy were firmly in place prior to its expansion, in the following decade, into insurance, shipping, construction, mining, chemicals, transportation and tourism. The strategy outlined in the group’s heralded 200 page report, The Creation of Domestic Industries, issued in 1929, was essentially a restatement of the 1918 Sidqi report (Tignor 1977a: 170; Owen 1981b: 6). The bank endorsed the development of hydroelectric power, new transport enterprises, railway electrification and fertilizer manufacturing—all ventures that required the cooperation of foreign capital. The Misr group and ‘Abbud were competing to develop these new local industries.

This chapter revisited the idea that a particular section of the business community during this period was guided by ideas of a completely independent, national industrial economy or, just as vaguely, by the objective of industrialization.^[17] The modest expansion in Egypt’s manufacturing capacity obviously fell far short of such exalted ends. The political capacities and strategies of investors are often assumed to have played a basic role. But these are questionable assumptions. I have argued that the coalitions of local capitalists who owned (or, in the case of joint ventures, shared ownership in) most Egyptian industries treated manufacturing monopolies, at best, as one possible area of investment. Egypt’s earliest business groups did not give up their holdings in the agroexport sector. Later coalitions of Egyptian capitalists—the Yahya, Misr and ‘Abbud groups—obviously did not forego investments in these dominant sectors either. In ‘Abbud’s case—and I suspect the same is true in many other cases—he used his profits from industry to become a landlord.

The tendency to conceive of the interwar political economy, above all else, as a struggle for economic transformation makes it hard to understand the limited objectives actually sought by interwar Egyptian investors and the factors that helped to shape them. For instance, as Clawson (1981) proposes and as the empirical record bears out, the development of Egyptian industry reflected changes taking place in the industrial structures of advanced capitalist economies. “The growth of Egyptian industry, while aided by the local nationalist movement and by state assistance, depended primarily on foreign capital because only it could provide the extra foreign exchange necessary for the import of machinery required to establish industry” (Clawson 1981: 89). This argument tends to underestimate the capacity to domesticate these foreign joint ventures. Still, in exceptionalist histories, the bourgeoisie is invariably constructed as a group literally pursuing “a world after its own image,” as Marx once put it, rather than as an inadvertent agency of change. In this latter sense, “the bourgeoisie” in post-1882 Egypt might more appropriately be rendered as the complex effects of a specific configuration of imperialism, the colonial and postcolonial state, and large fortunes amassed in land and cotton sales.

The bourgeoisie in Egypt is most often portrayed as a collective actor with an apparently limited capacity to act in pursuit of its virtually limitless objectives. But I have proposed that we reduce these objectives to human scale, taking as a guide the call in the 1918 Sidqi commission report for a limited expansion of local manufacturing capacity. This was hardly the opening broadside of a group of politically embattled visionaries. It was an accord among representatives of the most powerful economic interests in the country, and its terms continued to guide industrial policy throughout the interwar period.

The idea of an accord does not imply that outcomes were predetermined or that the interests of all parties were fully harmonized and accommodated or that conflicts were to be avoided. Tignor’s short discussion of the negotiations leading up to the 1930 tariff reforms provides remarkable evidence of the mechanisms that underlay these accords. He recounts how the administrative head of the Federation of Industries attempted to achieve a consensus with agricultural interests on tariffs. More important, he quotes in passing the observation that the country’s main agricultural-interest associations simply “had not organized around this issue” (Tignor 1984: 110–111).

Numerous conflicts of interest were played out in the course of building interwar industry; in particular, there were the recurring conflicts over control of state-subsidized ventures. And with the advent of the depression, sectoral conflicts clearly intensified over priorities and access to the state’s meager stock of resources, as I will show. Nonetheless, conflicts were manageable even during the depression, and perhaps the best indication of the overall lack of discord is the resiliency of the liberal economic regime itself. Egypt weathered the depression at the hands of a dictatorial prime minister who steadfastly avoided any significant change in the regulatory instruments of the state or, more crucially, encroachments on the privileged preserves of private investors. This is noteworthy when compared with, for instance, the etatist course set by Turkish leaders in the same period (Keyder 1987). By the time of World War II, even British officials would find it remarkable that vast stretches of the economic terrain, like the electric-power industry and the resources it generated, continued to be in private hands.

The leaders of the local, predominantly foreign business community had articulated a project of limited expansion of Egypt’s manufacturing capacity, and they pursued this goal as only one of many investment possibilities. The limited objectives accorded with their broad holdings across Egypt’s agroexport economy. The same investment model and priorities were adopted by Egyptian investors like the Misr and ‘Abbud groups in the 1920s. It is misleading to portray these important but nonetheless limited initiatives by ‘Abbud, Harb, Naus or any other local capitalist in more exalted terms. In imagining that interwar Egyptian investors actually acted in pursuit of such goals as challenging colonialism or seeking autonomous Egyptian capitalism, there is the comfort in knowing what the outcome had to be.

Notes