3. Business, the State and Industrialization 1945–1955

5. Power and the Postcolonial State

As in other countries undergoing the transition from colonial to postcolonial rule in the twentieth century, the elites who assumed power in Egypt following independence in 1922 faced challenges to their rule and, in this particular case, “failed…to consolidate control, to govern, and to remain in power” (Boone 1992: 16). In July 1952, a military clique launched a successful coup d’état, overturning the monarchy and, over the course of the next two years, the party system. In the slightly longer term, ‘Abbud and other leading local capitalists would be driven from the boardrooms and ultimately from Egypt.

A defining feature of exceptionalist accounts is their locating the explanation for this outcome in the origins of the particular configuration of capitalist production relations in the nineteenth century. Exceptionalist logics have generated conceptions of failure of a markedly different order: the failure of capitalists to constitute themselves as a completely independent national industrial bourgeoisie; the failure of the national governing elite to achieve so-called true or complete political and economic independence. As accounts of imperialism, capitalism and party politics in Egypt, they are no longer convincing. They remain important, however, as reminders of the discursive dimensions of the unfolding challenge to the established postcolonial order in the decade after the war.

Though mobilization against the vestiges of colonialism was a key part of the nationalist project after the war, it is clear that Great Britain was not omnipotent, and in the arena under study here—the development of basic infrastructure and capital-goods industries—representatives of the new Atlee government lost virtually all capacity to dictate outcomes. This decline took place despite Egypt’s importance as a potential market for British engineering firms and heavy-machinery producers, and the ample demonstrations by British officials of the importance they attached to preserving imperial prerogatives in this domain. As Waterbury correctly notes, “The British…tried in the 1930s and 1940s to make Import Substitution Industrialization (ISI) work in favor of British technology, expertise and supplies” (1983: 59–60). The critical point is that by World War II the effort had failed.

And though their compromises with colonialism and foreign capital would become central themes in oppositional discourses, the day-to-day administration of the Egyptian state was in the hands of an indigenous political elite, and, most certainly, local—and increasingly Egyptian—investors directed day-to-day decision making in various spheres of economic production and distribution. The thrust of this generalization holds even if the royal family is viewed as non-Egyptian. In tracing the outcomes of the competing plans for hydropower and nitrate industries in Egypt, I will provide further evidence for this deepening domicilization of the postcolonial state and economy, including the emergence of constituencies and cadres (and, implicitly, rationales) promoting industrial regulation.

The creation by the Nuqrashi administration of a public authority to build and operate the Aswan hydropower plant was the harbinger of a new era in the early postwar political economy. As such, this attempted extension of the state’s regulatory and productive capacity was contested by private investors, and, under the Wafd government of 1950–1951, the initiative was blunted. When the military government took power in July 1952, its publicists would put the Aswan project forward as a symbol of a decisive break with the past, but the contracts for the project were actually signed and preliminary excavation work begun between 1947 and 1948. The related outcome of this key postwar bargaining round is that ‘Abbud, whose efforts to capture the Aswan deal were undermined by a bloc of old political and economic rivals, went on to implement the first large, capital-intensive, import-substitution project of the postwar era, near Suez, where he founded a new Egyptian fertilizer industry between 1949 and 1951.

There is by now little need to explain the significance of the long-delayed Aswan scheme, which American intelligence agents identified as the “keystone” of postwar Egyptian development efforts and, thus not surprisingly, the focus of renewed controversy and conflict.^[1] By the end of the war few still questioned the logic of developing a domestic nitrate-fertilizer industry. The arguments of the American and Chilean nitrate producers, exporters and their local allies lost much of their power, particularly as bottlenecks continued to hamper the recovery of postwar world trade. The strong consensus in support of this particular ISI scheme is perhaps best reflected in the decision taken in the Egyptian Senate in July 1947, where landowners approved funding for the Aswan project by a vote of seventy-eight to two, and where the lone opposing votes were cast by ‘Abbud’s allies, Sirag al-Din and Sirri.

While the significance of the opposition of landlords and merchants declined, in the aftermath of the war new factors emerged to influence the battle between ‘Abbud and his rivals for control of the Aswan project and the course of postwar industrialization more generally. First, American businessmen and government officials began to widen their involvement in the Egyptian political economy, where they pursued the largely complementary goals of selling goods and services and undermining what remained of British imperial prerogative. Thus, at the end of the war, the Americans forced the dismantling of the Allied economic authority in Cairo (MESC), which the British had hoped to use to further their own postwar economic project.

A second factor was the unfolding of the postwar finance regime, or what was referred to at the time as the sterling question. Egypt built up massive sterling balances during the war as a result of heavy Allied spending. In 1945, Great Britain owed the Egyptian state and private creditors £400–440 million (or roughly $1.6–1.8 billion). The Atlee government clearly did not have the resources to repay any significant portion of this debt and rebuild its own domestic economy (Polk 1956). In response to the problem, the British state rigidly controlled Egypt’s access to dollars, producing a serious foreign-exchange crisis between 1947 and 1949 and ultimately reinforcing ISI currents inside Egypt, even while creating significant obstacles in the short term to building new Egyptian industries. Most accounts of the postwar period inexplicably ignore the financial dimensions of the rapidly developing crisis in the political economy and in Anglo-Egyptian relations, in a sense adopting “imperial” views on the matter. Governing elites at the time clearly viewed things differently. For instance, Egyptian and other delegates to the July 1944 Bretton Woods conference pressed, futilely, to include the problem of blocked sterling assets on the agenda of the International Monetary Fund and in discussions of the postwar international monetary order (Godfried 1987: 48).

Third, the renewed drive to develop national power resources and manufacturing industries was intertwined with efforts to build up the regulatory capacities of the state. This new postwar round of institution building extended to many arenas, including the partial nationalization of utility services (the tramways) in Alexandria, the incorporation of Cairo as a municipality, and the attempt to extend controls over the foreign-dominated petroleum sector. World War II had hastened the end of the laissez faire era in the Egyptian political economy, which posed new opportunities and new challenges for Egypt’s business oligarchs. In the case of the electric-power sector, the creation in June 1945 of a new public Hydroelectric Power Commission to oversee the building of the Aswan project ended ‘Abbud’s bid to take over this resource. More generally, the contours of a new postwar regulatory regime began to emerge amidst, and as part of, the ongoing struggle over the distribution of resources.

The Political Economy of Development in Postwar Egypt

Under the guise of a revitalized national project of social reform and economic development, Prime Minister Mahmud al-Nuqrashi’s cabinet decided in May 1945 to undertake the power-station project in the public interest. The project was to be funded by an internally floated loan, opened to international tender, and operated by the Egyptian state. The ‘Abbud group tried what turned out to be one last time to salvage the competitive position that it had built during the period of wartime Wafd rule.

The composition of the fractured coalition government made predicting the ultimate fate of ‘Abbud’s project hazardous, though the odds seemed to be against him—or so the Cairo-based British investors Grey and Campbell argued in a torrent of dispatches to EEC headquarters in London. On the one hand, ‘Abbud’s closest confidant, Ahmad Mahir, had been named prime minister. ‘Abbud clearly counted on Mahir’s cooperation, and on this basis Lampson tried to make a credible case for continuing to back the ‘Abbud plan in his own cables to London. On the other hand, Mahir’s position in the cabinet was weak. The finance minister and founder of the dissident Wafdist Bloc, Makram ‘Ubayd, was arguably more popular, was more ruthless and, as he made clear to the embassy and to British company officials, intended to crush ‘Abbud’s scheme. The new minister of commerce and industry, Habashi, lined up solidly behind Makram ‘Ubayd in this arena, not least because of his own connections to ‘Abbud’s competitors in the Misr group.

Whatever hopes ‘Abbud still harbored for his Aswan scheme were sunk in the wake of Mahir’s tragic murder in February 1945 and the elevation of Nuqrashi, cofounder with Mahir of the Sa‘dist party, as the new prime minister. Nuqrashi, who in the old British personality reports had been dubbed an extremist and was once suspected of plotting the murder of a high British colonial official, was, like his own murdered colleague Mahir, now suspect in the eyes of young militants for collaborating with colonialism. The legacy of the past quarter century of nationalist politics and decolonization had emerged as part of the postwar contest for power in Egypt.

In the 1930s, Nuqrashi led the call to open the Aswan scheme to an international competition. His opposition to the EEC scheme had helped to fracture the Wafd party in 1937. Eight years later, Nuqrashi renewed his principled support for an open international tender, but now national interest coincided much more closely with those of his relatives, “intimate friends” and political allies who were organizing as a competing investor bloc in the power sector (Egyptian Gazette 26 September 1945; al-Kutla 2 May 1947). These included Tahir al-Lozi, Nuqrashi’s brother-in-law, from a family whose members were themselves founding investors in the Misr group; U.S. Westinghouse, the newest multinational entrant in this crowded field; relatives of the king; and Mamduh Riyad, Nuqrashi’s new minister of commerce and industry, who had propitiously closed a consulting deal with a U.S. engineering firm before taking office.^[2]

The Misr group’s investment in the opposition to the Wafd between 1942 and 1944 had obviously begun to pay dividends. Buoyed by the profits amassed during the war and steered by the politically astute and well-connected ‘Afifi Pasha, these investors recovered from the financial crisis of the late 1930s and the hostile takeover bid by ‘Abbud. In the power sector, ‘Afifi and his allies had adopted a strategy much like ‘Abbud’s, building bridges simultaneously to the leadership of the British Chamber of Commerce in Egypt in support of the proposed Delta Scheme while organizing a consortium to bid for the Aswan project. (See Table 4.)

Most crucially, ‘Afifi and his partners again tried to attract American Cyanamid to their side, arguing with some justification that while the Misr group’s political fortunes were waxing, ‘Abbud’s were clearly on the wane.^[3] Examples abounded. The Misr group obtained government backing for its proposed new, American-supplied rayon factory. The Nuqrashi government had returned the state’s Red Sea–Mecca pilgrimage concession to the Misr group’s shipping line and the Egyptian Senate had opened a highly publicized investigation of ‘Abbud’s bus lines. The minister of finance, a relentless opponent since the 1920s, played the key role in this multifront attack on ‘Abbud’s firms, launching a drive to recover millions in alleged excess profits owed by ‘Abbud’s shipping and sugar companies (Egyptian Gazette 3 April 1945; Tignor 1989: 56–57). These claims would dog ‘Abbud for the next decade.^[4]

Governing officials and rival investor blocs were enmeshed in a protracted chicken game through the first half of 1945. ‘Abbud’s strategy entailed promoting himself as the key to a successful agreement with the international firms that controlled the necessary electrochemical technology. To put it simply, if the government wanted to see a domestic nitrate-fertilizer industry built in Egypt, they would have to reach an accord with ‘Abbud.

No side blinked despite a quickly escalating mix of incentives and threats. Most crucially, Pope, the American Cyanamid director, showed little willingness to undercut his Egyptian partner, and he deferred, wisely or not, to ‘Abbud’s hard-ball strategy. Thus Pope refused all requests to submit details of the offer unless and until the Egyptian government decided to forego a public tender. In meetings with Prime Minister Nuqrashi, Pope pressured him on the grounds that scarce equipment earmarked for the Egyptian scheme was being bid for in India and other markets. More blatantly still, Pope tried to gain the support of the cabinet’s technical adviser, ‘Abd al-‘Aziz Ahmad, a member of the Egyptian Senate, with a clumsy offer of a bribe! Pope’s ethics were more fine-tuned than most. While admitting to having offered ‘Abd al-‘Aziz a job, he made a point to note that he never mentioned any specific salary.^[5]

Nuqrashi did not blink. Instead, his cabinet voted in May 1945 to go to tender, a move that Lampson admitted might be logical from an economic point of view. Nonetheless, he deemed it reckless and irresponsible since it ignored the long-standing British claims in this arena. The ambassador also blamed the Misr group’s chairman, ‘Afifi, for playing a behind-the-scenes role. The cabinet, which had pointedly refused to commit to a specific end use for the electricity, elevated the long-time critic of the fertilizer factory idea, Ahmad, to head the newly created public Hydropower Commission.^[6]

The vote met many constituencies’ needs, most notably those of ‘Abbud’s rivals, Yahya and ‘Afifi, who hoped, finally, to woo the Americans to their side. ‘Abbud’s response to the cabinet gambit demonstrates once more the zero-sum nature of the conflict as acted on by these Egyptian investors. The reversals at the hands of Nuqrashi drove him first to try to build new bridges to the palace, via both the king’s adviser, Hassanhamza Pasha, and Sirri, a wartime prime minister and a relative of the king’s by marriage who ‘Abbud had newly incorporated into his investment group. At the same time, though, he was urging Lampson to intervene to put his Wafd party cronies back in power.^[7] And in tandem with these and undoubtedly similar political initiatives, he acted once again to end the Misr group’s hopes of bringing American capital into their rival Anglo-Egyptian Delta nitrate-factory scheme.

‘Abbud’s U.S. partner, Pope, had warned that unless the cabinet acted quickly, he would advise ‘Abbud to drop the Aswan scheme. Turning up the pressure, in August 1945, ‘Abbud registered a new £E 4 million venture, the Chemicals Manufacturing Corporation, with Sirri and, if U.S. documents are to be believed, the crown prince of Egypt holding shares.^[8] This company then became the vehicle through which ‘Abbud and Pope eventually opened negotiations with the Export Import Bank of the United States (ExIm Bank) for a dollar loan to build a diesel-powered nitrate factory south of Suez, on the eastern edge of the Delta. Thus, the continued setbacks in his Aswan scheme and his partnership with U.S. investors led ‘Abbud to take over the idea of the Delta Scheme from its original Egyptian promoters.

The outcomes of the play or plays in this arena accommodated some parties, reinforced the positions of others and turned disastrously against still others. It appeared that Egypt would finally have a domestic nitrate industry, though this outcome was not what ‘Abbud’s competitors intended. By January 1946, the Misr group chairman, ‘Afifi, had admitted defeat, and toward the end of the year he began negotiating for a position on the board of ‘Abbud’s proposed new U.S.-backed venture.^[9] There was little Lampson could do as he prepared to leave Cairo in March 1946 after more than a decade of promoting the EEC’s hydropower project other than to construct a usable account of the failure. He blamed the Nuqrashi government’s “negative attitude” and consoled himself with the lie that the Egyptians did not understand their own best interests.^[10]

‘Abbud’s decision to found the Fertilizers and Chemical Industries of Egypt, Ltd., amounted to a double blow to the British investors with the longest-standing claims in these projects: the EEC and its Cairo-based affiliates, the Associated British Manufacturers in Cairo, V. B. Grey and Cecil Campbell. These foreign investors and their local representatives attempted to cooperate with both rival Egyptian business groups. Though the strategy was designed to minimize their risks in an unstable political environment, from ‘Abbud’s perspective it had contributed to the undermining of his own competitive position and ultimately led him to revise his objectives. As a result, not only was their potential share in the Delta factory scheme lost, but the obstacles in front of their one remaining hope—the Aswan scheme—grew steadily more formidable. As ‘Abbud deepened his commitment to building the alternative Suez (ex-Delta) fertilizer plant between 1946 and 1948, his objectives in the Aswan arena began to shift against the Aswan fertilizer-factory proposal—the development project that he had been tirelessly promoting for almost two decades since 1927.

The Uphill Battle to Build a State

The decision in May 1945 to create the national Hydroelectric Power Commission (HEPC), which was charged with supervising the Aswan electrification project, should be seen as part of a broader process of institution building and reorganization that had been catalyzed by World War II. Wartime demands had exacted a tremendous toll on the country’s crazy quilt of public and private power plants and had made the related issues of rationalization and expansion of the power sector a priority for postwar reform. The Aswan project was eventually integrated into the Public Works Ministry’s expansive vision of a ten-year-long electrification program for all of upper Egypt.

The commission’s chairman, Ahmad, a retired civil service official and Sa‘dist party supporter who had developed the plan back in the 1930s to deliver power from Aswan to Cairo, reemerged as a key lobbyist for public ownership of power resources and, unsurprisingly, for his own pet scheme of long-distance power transmission. His views were given extensive coverage in Cairo’s main Arabic, English and French dailies as well as in the pages of Majalla al-Muhandisin, the journal of the engineers’ professional association. Newly matriculated Egyptian engineers and other professionals, whose prospects for private employment were limited by entrenched patterns of foreign and Egyptian minority dominance in salaried positions, formed a supportive and increasingly visible social base for an expanded public sector (Egyptian Gazette 19 March, 20 April 1945; Majalla al-Muhandisin April 1945, May 1945; Bianchi 1989: 75–76; Moore 1980: 27–32, 41–44, 154–158). Ahmad’s public campaign was also an open invitation for even more ambitious professional rivals to launch technical criticisms of his pet electrification plan.

More critically, however, Ahmad faced an uphill battle to secure the independence and authority of Egypt’s would-be Tennessee Valley Authority against the competing claims and countervailing power of politically influential blocs of domestic investors. Egyptian capitalists were intent on maximizing the flow of, and access to, distributive resources from the HEPC while minimizing the degree of regulatory interference with their own market-based privileges. For instance, ‘Abbud and his rivals clearly did not want to surrender the gains accruing from their privileged bargaining position with foreign capital in this arena, in part because these local Egyptian capitalists saw the power-production and distribution sector itself as ripe for “indigenization” and absorption into their private empires. Similarly, Foreign Office documents from this period describe a proposed new private Egyptian venture to take over electrification of Cairo and the Egyptian Delta, with the government to be offered an unspecified number of seats on the board of directors.^[11]

The justification for the Aswan project in the eyes of many of the country’s business and landowning oligarchs hinged on the promise that it would subsidize a new, profitable manufacturing sinecure and fill the skyrocketing demand of food and cotton producers. Otherwise, the HEPC stood little chance of gaining the cabinet’s support for the scheme, much less that of the pashas who headed the parliament’s finance committees. Thus Ahmad’s capacity to shape the agenda appeared limited, and he reconciled himself to the reconfiguration of the project as a development plan for the elites of Upper Egypt, where, incidentally, the Sa‘dist coalition governments had the strongest regional base of support. The old engineer had his hands full in marshaling the political, economic and technical resources necessary to protect the HEPC from the withering attacks on its competence, institutional capacity and autonomy.

When the commission unveiled its in-house designs for the project in March 1946 and invited bids to supply the plant and equipment, the competing groups refused to tender, while blasting Ahmad and his prestigious British consulting engineers, the firm of Kennedy and Donkin, for their alleged inexpertise. The commission agreed to postpone the closing date of the competition while they rewrote the specifications. The companies then insisted on the right to submit their own proprietary designs, which seemed to cast further doubts on the qualifications of the HEPC and led to two additional postponements of the bidding deadline, until the end of January 1947.^[12] Ahmad’s retrospective account obscured the cause of this year-long delay, which he attributed simply to the companies’ preoccupations with other concerns (1955: 63–65).

As the companies continued their maneuvers against the HEPC, a second front was opened in the war by Mahmud al-Shishini, an ambitious and prominent professional who headed the Electrical Engineering Department at Cairo University. Shishini emerged as the single most persistent and forceful new critic of Ahmad and the HEPC, whose design for the power plant, he charged, placed the fifty-year-old Aswan Dam in danger (Majalla al-Muhandisin March 1946: 5–9). The argument was an old one. The design, which was based on the work originally carried out by Ahmad and others on the staff of the Ministry of Public Works in the 1930s, was known as the penstock scheme. Penstocks were the steel pipes that were to be inserted into the dam’s sluice gates to supply water to the turbines. Shishini argued that the pipes would transmit unacceptable levels of vibrations from the turbines, and he urged the HEPC to adopt his own alternative design, which, coincidentally, the U.S. Westinghouse-led consortium was proposing to implement.

Egyptian engineering circles commonly presented Shishini’s interventions solely as a technical or professional matter, along the lines,for example, of the British irrigation engineer Willcocks’s ill-fated dis-sent over hydraulic policy after World War I. Nonetheless, Shishiniwas a founding investor in the Electrical Development Company of Egypt, incorporated in 1946 to compete for the Aswan business and other anticipated electrification contracts. In essence, the new firm represented U.S. Westinghouse in the expanding Egyptian power-generation and -distribution market. Leading businessmen, al-Misri publishers and Wafd party allies, Mahmud and Hushamza Abu al-Fath, were major financial backers of the venture who sided with Shishini when Shishini’s overly confrontational approach with Ahmad, the HEPC and other government agencies finally led to an uprising among the directors and shareholders.^[13]

The objectives of the two main competing blocs of investors converged on trying to stop the government from going through with a public tender. There is little mystery in the HEPC’s choice of the tender strategy. Given a predictably optimistic assessment of their own abilities to monitor the process, the commissioners intended to obtain the most up-to-date technology at the most competitive price. Just as predictably, executives of American Cyanamid, EEC and other firms disparaged the Egyptians’ technical capacities, though these capacities were not what had them worried.

Let us consider the case of the Aswan consortium then still nominally led by ‘Abbud. For the two British machinery producers, EEC and AEI, to have to compete on price and delivery dates basically meant forfeiting the multi-million pound order. British officials admitted in private that these firms would be unable to supply any of the required electrical and chemical plant between 1947 and 1949, a “gloomy” forecast then, which in retrospect appears overly optimistic.

ICI continued to advise its Cairo office to string along Ahmad and the HEPC, while deprecating the government’s attempt to regulate the industry and reiterating that it had no interest in running a factory in Egypt.^[14] As for ‘Abbud, the increasing time and resources that he devoted to the Delta project were as clear an indication as any of his own shifting objectives.^[15] Tellingly, when the tenders for the Aswan project were finally opened in January 1947, ‘Abbud had not even entered a bid (Egyptian Gazette 31 January 1947).

The Westinghouse consortium pursued a strategy similar to the EEC’s, though the U.S. producers were presumably not concerned about their competitiveness per se. These investors also attacked the HEPC’s competence while purposely holding back on their bid, with the ultimate objective of taking over the project. They were clearly well connected, as evidenced by the successful campaign mounted in the fall of 1946 by members of the Sidqi cabinet to delay the closing of the competition while Westinghouse ostensibly prepared an alternative plan for submission.^[16] At the same time, the growing shortage of hard currency, and particularly dollars, toward the end of 1946 created a powerful disincentive to adopting the American designs unless and until Westinghouse could secure approximately $20–40 million in financing. The failure to do so led the firm and its allies both to mount a new campaign to discredit the HEPC and to propose to re-engineer the entire project (Egyptian Gazette 23 February 1947; Akhbar al-Yawm 26 April 1947). This delaying tactic came in the spring of 1947 as the parliament prepared to debate funding for the government’s scheme.^[17]

The focus of political action by the competitors gradually shifted to the parliament, where committees of the Chamber of Deputies and of the Senate began deliberations on the Aswan project and the Nuqrashi government’s request for £E 10.5 million (approximately $43.4 million at the prevailing exchange rate). The deputies ultimately approved the project in June, and the Senate followed suit in July 1947. The details of the legislative maneuvers shed much light on the evolving interests of the ‘Abbud group and its political allies.

Little evidence suggests that the commission or its own cabinet and bureaucratic allies (primarily within the Ministries of Public Works and Finance) expected the project to sail through the shoals of the legislature unassisted. Nuqrashi in fact tried to bypass the legislature (Egyptian Gazette 9, 11 February, 16 March, 29–30 April 1947). The course had to be well mapped in advance, beginning with the assembly in April 1947 of yet another international commission, the last in a long line of experts brought to Egypt to approve one or another version of the project.

The experts’ endorsement of the government scheme was published at the end of April, strategically in view of the wave of publicity given to the criticisms of Westinghouse, Shishini and others, and the almost daily interventions in the pages of al-Kutla, the pro-Nuqrashi al-Asas, the Wafd’s al-Misri and the Amin brothers’ Akhbar al-Yawm. The government and its allies sought the high ground, defending the HEPC’s decisions against alleged pressures from Great Britain, the “international monopolies” and their agents. They in fact succeeded in that these arguments have formed the core of the conventional narrative ever since. The opposition’s defense of the national interest, by contrast, focused on the alleged threats to the dam and the irrigation system in general, the scheme’s technical flaws, and the high and unnecessary costs that a hard-pressed population was being asked to absorb (Akhbar al-Yawm 26 April, 12 July 1947; al-Kutla 1–2, 13, 16, 21, 26, 29 May 1947; al-Misri 11 June 1947; al-Asas 17 June 1947; ‘Abd al-‘Aziz Ahmad 1955: 62; Waterbury 1979: 147).

The government appeared to clear one hurdle when a majority in the finance committee of the lower chamber endorsed the HEPC’s project in its June 1947 report, but only after the minority succeeded in appending a report of its own, written by Shishini, condemning the project (Chamber of Deputies 1948: 24–25, 41; Akhbar al-Yawm 7 June 1947; Egyptian Gazette 12 June 1947). The debate in the full chamber was conducted along familiar lines: was the government successfully defending Egypt against “imperialist policy” or foolishly pursuing a technically and financially unsound investment scheme?

While the competitors continued to ply the legislators with reams of technical data, Nuqrashi fed the press key documents from the government’s bulging archives; these documents were used to show how, for years, the British embassy had been promoting the interests of the EEC and opposing the principle of competition. The chamber, which was itself a product of rigged elections, voted overwhelmingly, 144 to 6, to support the allocation of funds (al-Asas 15 June 1947; Egyptian Gazette 15–17 June 1947; Akhbar al-Yawm 12 July 1947). One of the government’s opponents on the subcommittee, ‘Abd al-Qawi Ahmad, the minister of public works in Sidqi’s 1946 cabinet, described the press campaign as extremely effective in convincing parliament to support the government’s plan.

The president of the Senate, Muhammad Haykal, hoped to boost the government over the second hurdle, but the Senate’s investigative committees protested the haste with which the issue had been discussed by the deputies and promised a more thorough review. The Egyptian Gazette (16 June 1947), which had long backed the EEC in this arena, raised the hope that leading engineers among the Senate’s ranks might yet make the case for rejecting the government’s plan. Nuqrashi was eventually forced to resolve the more glaring and costly inconsistencies between the blueprints of the HEPC, on the one hand, and the Ministry of Public Works’ own, newly published ten-year plan for Egyptian electrification, on the other.

Under attack for his refusal to commit the government in advance to a particular end use for the power, Nuqrashi had to reject key parts of the HEPC plan as the price for a majority vote in the subcommittee, which finally passed the funding request by a vote of five to three. The HEPC proposal called for construction of a calcium nitrate-producing factory at Nag‘ Hammadi; the Ministry of Public Works proposed an ammonium nitrate factory and a steel factory in Aswan. The international commission that reviewed the HEPC scheme rejected the idea of a steel factory as uneconomical. Nuqrashi finally endorsed the Aswan ammonium nitrate project, obtaining the key support of Senate Vice-President Muhammad Shafiq in the process (al-Kutla 26, 29 May 1947; al-Misri 22 June 1947; Egyptian Gazette 23–26 June 1947).

The project’s opponents in the subcommittee, led by the Wafd’s ruthless boy wonder, Sirag al-Din, and ‘Abbud’s newest business partner, Sirri, redoubled the attack on government policy during the full Senate debate early in July 1947. Sirag al-Din blasted the government for its irregular procedures and contradictory objectives and for lying about the true costs of the project, including the cost of the fertilizers. Sirri seconded Sirag al-Din, arguing that it was crazy to build the project in stages. He wanted the power to be devoted to steel production (which, incidentally, would protect his new investment in ‘Abbud’s fertilizer project). Sirri called on the state to invite a competing set of tenders on the basis of the alternate design. The two failed to sway the solid pro-Nuqrashi bloc within the Senate, however, which defeated a last, desperate attempt to postpone the vote and approved funding for the scheme, seventy-eight to two (Madabit majlis al-shuyukh [Minutes of the Egyptian Senate] session 55, 7–9 July: 1412–1431, 1443–1462, 1480–1504, 1551–1556; Egyptian Gazette 10 July 1947).

The government’s confidence was no doubt high in July 1947. Ahmad, the HEPC and, by extension, the Nuqrashi regime appeared to have moved the power project forward after years if not decades of setbacks and delays. At the same time, and following months of fruitless negotiations, Nuqrashi’s Ministry of Finance had concluded an interim financial agreement with the British authorities. For a brief moment, Egypt looked to have surmounted its foreign exchange crisis.^[18] Within days of the Senate vote, Ahmad announced the award of the contracts for turbines, generators and switchgear, with the bulk of the approximately £E 5 million in orders going to Swedish and Swiss firms (Egyptian Gazette 14 July 1947). Nuqrashi’s cabinet quickly approved the decision.

Though Ahmad continued to press ahead with the project, the mood and motivation had changed dramatically by the fall of 1947. The biggest problem was London’s decision in August to suspend convertibility of the pound, the effects of which reverberated quickly in Cairo and in the capitals of other creditor nations. For instance, though the Egyptian state had counted on the release of some $175 million equivalent of hard currency for the rest of 1947, after August they could count on no more than $6 million over what they earned on current transactions (roughly $30 million), according to American treasury officials. Egyptian negotiators spent the remainder of the year finalizing arrangements with manufacturers, central bankers and the contractors who bid for the preliminary excavation of the site. Ahmad was portrayed in British accounts as driven by the fear that the Nuqrashi administration’s days were numbered.^[19] The more accurate portrait would be of a government desperate to demonstrate to its own population some capacity to solve the country’s mounting problems (Louis 1984: 257–264).

The declining power of the British state to shape outcomes in this sector left company officials protesting feebly in London and the career Middle East hands clucking self-righteously about Egyptian “national arrogance.” Oliver Lyttelton, the wartime cabinet official who took over AEI, wanted the sterling negotiations to be used as a club to secure the contract. Yet the understandable view from Whitehall of the Aswan deal as one more case of “anti-British prejudice triumphant” needs to be interrogated.^[20] First, British engineers served throughout as the main international consultants to the HEPC, and they oversaw the tender process (earning a hefty fee for their service). Geoffrey Kennedy, the head of Kennedy and Donkin, eventually received a decoration (the first order of merit) from Nasser for his firm’s role in building the hydropower station.^[21] Second, at least one major British manufacturing firm obtained $3 million in orders through the HEPC, roughly 15 percent of the award (British Chamber of Commerce in Egypt September 1947). Third, and much more pivotally, the conflict between the HEPC and the EEC consortium was at heart about investors’ preferences for organizing and implementing the project—that is, with a minimum of state oversight and regulation—rather than the corporations’ national identities. Thus, the rival U.S. Westinghouse consortium faced precisely the same kind of concerted and successful opposition to its own bid to take over the project from the HEPC. The relative tentativeness of this particular challenge in comparison with later rounds, or the fact that in other regulatory arenas (such as those encompassed by the company law of 1947) local capitalists presumably derived some benefit, would make little difference in the responses of ‘Abbud and other investors to this claim of regulatory authority.

In the case of the ‘Abbud group, the reaction included the founding of the new manufacturing subsidiary, Fertilizers and Chemical Industries of Egypt, Ltd., with a $5.6 million loan approved by the ExIm Bank board in Washington in July 1947. The founding of the company seems to have marked the beginning of a new phase of cooperation between ‘Abbud and erstwhile rivals in the Misr group, which began with the offer of a seat on the board of the chemical firm to ‘Afifi and culminated in 1950, when ‘Abbud joined the board of Bank Misr, reportedly against ‘Afifi’s wishes. The significance of this rapprochement should not be underestimated, given the decades-long feud between these two personal antagonists and the history of relentless competitive conflicts between the rival groups that I excavated in Chapters 3 and 4.

This new and limited accord among rival investors was an organizational response through which the business oligarchs struck back at what must have appeared as related challenges to their privileged position by state-building elites, a new set of would-be competitors or both. Yet, by mid-1949, a government headed by Ibrahim ‘Abd al-Hadi, who took over as Sa‘dist party president and Egypt’s prime minister after Nuqrashi’s assassination, was pursuing a different, clearly less threatening and inclusive approach to regulation. It certainly must have appeared that way to businessmen such as ‘Abbud, Sirri and ‘Afifi, who were appointed to an entirely new commission to oversee the building of an iron and steel factory in Aswan that the government would underwrite and the oligarchs and their partners would operate. As for the proposed nitrate factory, this new administration deemed it somewhat less vital to the country’s future development and filed the plan away.

Sirri, who would go on to engineer the return of the Wafd to power, was a main promoter of the iron and steel factory. ‘Abbud joined the board of the new parastatal industrial development bank, founded by the ‘Abd al-Hadi government in 1949. He also found the climate suddenly conducive to signing a new agreement covering the terms of the sugar-company monopoly after years of delay (Egyptian Gazette 20, 28 May, 14 June 1949; al-Asas 2 October 1949; Lemonias 1954: 34–35). These same investors successfully blunted the regulatory initiative by the Nuqrashi administration, though even British authorities admitted that creation of such a public authority was long overdue.

Once Sirri, who had an obvious and direct stake in these matters, took over the prime minister’s duties in July 1949, the original head of the HEPC, Ahmad, was unceremoniously fired, and work on the hydropower scheme itself was suspended pending a thorough review by the new minister of public works: the Wafd’s own Muharram. Thus, broad issues of party, interest and ideology were involved in this particular arena. At the same time, many of the criticisms leveled at Ahmad and his consultants during the 1946–1947 bargaining round over the alleged design flaws in the original scheme looked to have been sound. Ahmad was forced to admit that £E 5 million out of a total of £E 7 million in cost overruns since 1947 had been due to “modifications” in design and layout. These revelations, which were given ample space in the pages of the Egyptian Gazette (30 September, 6, 10 October, 29 December 1949, 21 February, 30 May, 6 July 1950) and the Wafd party’s standard al-Misri,were welcomed by critics eager to dismantle the HEPC or at least dilute its authority (al-Ahram 3 April 1951, 6–7 January 1952; Majalla al-Muhandisin May 1952: 21–22; ‘Abd al-Mu‘ti ‘Abd al-Wahab ‘Amr 1960: 7–9).

Still, the Nuqrashi government’s initiative was no illusion. On 19 March 1948, ground was broken south of the town of Aswan. King Faruq laid the cornerstone for the future industrial complex. And work—primarily excavation in the riverbed for the power station—finally began on the hydropower plant.

Reining the State Back In

Sirri’s last and most important action as a transition prime minister in the winter of 1949–1950 was to prepare the ground for the return of the Wafd to power. I will take up the issue of the last 1950–1951 Wafd government in detail as part of a broader analysis of Egypt’s business oligarchy and its relations with the governments that directly preceded and followed the July 1952 coup. Here, I am interested in the change in government mainly in terms of its impact on the course of the Aswan project. Since the electrification scheme was the centerpiece of Egyptian public industrial-development policy until at least 1954, when planning for the new massive Aswan High Dam and power project got off the ground, the institutional history helps in illuminating the evolution of state capacity in the industrial sector as well as the mythology of the early period of military rule.

When Sirri handed the reins of government to the Wafd in January 1950, Muharram remained at his old fiefdom in the public-works bureaucracy. He continued on the course plotted in October 1949, when he “temporarily postponed” the scheduled announcement of tenders for the second phase of civil-engineering construction at the dam site, to the chagrin of the British firms that were desperate to win the estimated £E 3 million contract. The main U.K. group suspected that a German competitor had engineered the delay, but the HEPC’s internationally renowned senior consultant, Kennedy, confirmed that the delays were part of Muharram’s project to discredit the commission chairman, Ahmad.^[22] The venerable engineer was finally removed from his post just weeks before the general election (Egyptian Gazette 7, 10, 12 October, 29 December 1949).

The postponement of tenders remained in place for a year, until November 1950, while Muharram reorganized lines of authority over the project; retained his own favorite consulting engineer, Sir Murdoch MacDonald, whose firm was most prominently associated with Nile engineering works over the past half century; and recast the project’s terms yet once more. Muharram created a new undersecretarial post within the ministry, which took over supervisory authority from the HEPC. More crucially, Muharram’s new appointee followed the minister’s (and MacDonald’s) direction in returning to a comprehensive approach to power production and distribution, and he began to rewrite specifications for all remaining equipment and engineering services as a giant single tender.

Muharram’s takeover and reconfiguration of the project survived the first hurdle in the spring of 1950, when yet another committee of foreign and local experts he had assembled approved the penstock design. A single dissenting vote was cast by representatives of a Swedish consulting firm, VBB, which had submitted a report criticizing it. This dissent would prove important to Muharram’s opponents in 1952. But most noteworthy at this juncture was that U.S. Westinghouse and its local partners, notably Shishini, dropped their own longstanding public criticisms of the penstock plan. The reasons are now fairly plain.

These particular competitors had basically been shut out of the Egyptian heavy-electrical equipment market during the Nuqrashi years, not only in the case of Aswan but also in the competition in 1947–1948 to reoutfit the Cairo North power station. Indeed, Shishini blamed the old HEPC head (and Sa‘dist party member), Ahmad, personally and brought suit against the Egyptian government after Ahmad allegedly influenced the outcome of this second competition.^[23] The picture changed dramatically, however, once Muharram took over as minister of public works. In October 1949, he delivered an £E 5 million power-station contract to Westinghouse and, importantly, to party allies Shishini and the Abu al-Faths, who were investors in the joint venture. In March 1950, the contract was formally awarded with much fanfare, Shishini’s suit against the government was dropped, and he was made a senator (Egyptian Gazette 30 October 1949, 30 January, 2, 21 February, 24 March, 4 April, 30 May 1950; ‘Abd al-Mu‘ti ‘Abd al-Wahab ‘Amr 1960: 7).

By the summer of 1950, Muharram and officials at Public Works were boasting expansively of a new and combined electrification and industrialization master plan for the Aswan region, to cost £E 100 million and to include both a steel factory and a fertilizer factory. When British embassy analysts attempted to reconcile this huge new public investment plan with the divergent preferences of the Wafd’s private backers, notably ‘Abbud, they took note of Muharram’s careful specification of the timetable for implementing the scheme. Work on the power plant, begun in 1948, was to continue as soon as possible—that is, once tenders for the new civil-engineering works were issued later in the year, the offers were evaluated, and final contracts were approved and signed. This phase was going to cost approximately £E 22–25 million (Egyptian Gazette 19 April 1949; al-Ahram 3 April 1951). Muharram insisted, however, that the most efficient way to proceed was to finish the power plant before starting the construction of the factories, and the new timetable envisioned completion of the power plant in stages between 1955 and 1957.^[24]

An important obstacle in the way of Muharram’s revised scheme was cleared as what some British officials called the Wafd’s “Sirag al-Din–‘Abbud wing” gradually extended its control over policymaking. This expansion of control took place in a series of conflicts with a so-called reform wing associated with Sirag al-Din’s main rival inside the party, Najib al-Hilali. In November 1950, Prime Minister Nahhas fired his finance minister, Zaki ‘Abd al-Mut‘al, a fiscal conservative and Hilali’s main protégé in the cabinet. Among other causes of this controversial cabinet purge, Mut‘al resolutely opposed plans for financing the large-scale public-works project. ‘Abbud and other critics of Hilali and company within the business oligarchy were then appointed to a newly created Higher Advisory Council (HAC) to assist in developing a coordinated government policy for the “national economy.”^[25] Though it is generally not recognized, this organization was essentially rechristened the National Production Council in the winter of 1952, when a new set of businessmen-advisers approved the Aswan project as the first “new” development scheme of the revolutionary regime.

Muharram’s ministry and consultants completed design changes, called for new tenders, evaluated the offers and made the preliminary recommendations on the bids between November 1950 and mid-1951. As of that point, £E 4 million had been spent on consulting and preliminary construction. I have been unable to find detailed documentation on these deliberations, but Hamid al-Qaddah, then rising in the ranks of the engineering syndicate, close to its leadership (including Muharram) and an investor in the building materials and contracting sectors, claims that a consortium with which he and other local capitalists were involved had been tapped for the contract and involved in final negotiations late in 1951 (interviews with Hamid al-Qaddah, Cairo, 24 April, 14 July 1985; al-Ahram 3 April 1951). It is no wonder, therefore, that Qaddah used his column in Majalla al-Muhandisin (April 1952 p. 10; May 1952 pp. 21–22) to condemn the politicization of technical issues when the Wafd government’s Aswan policy came under fresh attack in parliament in the winter of 1951–1952, just weeks before the explosion of fighting in the Canal Zone and riots in Cairo brought the last popularly elected Egyptian government to an end.

Political conditions in Egypt after October 1951 were hardly conducive to progress on any kind of development initiative. In place of administrative continuity, four governments rose and fell in quick succession in the months before the July 1952 military coup. Yet, for a post-Wafd prime minister like Hilali, who staked his claim to rule on the promise of substituting reform for Wafdist demagoguery and corruption, the Aswan project was an easy one to seize upon in order to legitimate his clique’s rule. A revamped Higher Consultative Committee rubber-stamped the project, and, despite the invariable criticism of the technical design, Hilali apparently pushed through an authorization for credits by late spring 1952, while the new minister of public works prepared to complete negotiations with the prime contracting firms. After July 1952, though, the earnest efforts of most of these particular ancien régime stalwarts no longer mattered (al-Ahram 16 April, 12 May 1952; ‘Abd al-‘Aziz Ahmad 1955: 66; ctn‘Abd al-Mu‘ti ‘Abd al-Wahab ‘Amr 1960: 9).

National Power and the Aswan Project, 1953–1960

Though Hilali did not remain in power long enough to reap the symbolic windfall, the power project paid off handsomely for Nasser and the other officers turned state builders. The rapid progress on the final-implementation phase of the Aswan scheme become emblematic of the new regime’s ostensible technocratic and developmentalist ethos, while the turbines, generators and pylons were icons for the country’s commitment to national industry and industrial power, at least until construction of the High Dam project in the 1960s.

Understandably enough, the new regime and its own key backers—for instance, U.S. Ambassador Jefferson Caffery, the CIA station chief and his staff, second-tier investors like the Amins and the journalists they sponsored such as Haykal, etc.—were invested in creating the appearance of a sharp, rapid and decisive break with the past. Nonetheless, O’Brien (1966: 63) pointed to possible tensions in such accounts:

During the early years when the officers remained very preoccupied with consolidating power and expelling the British from the canal zone, no very clear departure can be observed from the kind of economic policies pursued by the old regime. Men so overwhelmingly concerned with a struggle for political power naturally found little time to consider the long-term future of their country. Excluding land reform, up to the Tripartite Aggression [the 1956 War], continuity seems more evident than change.

This observation is indisputably true in the case of the Aswan power scheme, which was reapproved for implementation in November 1952 by a new Egyptian cabinet headed by General Muhammad Nagib, who also served as the junta’s figurehead. His minister of finance, Galil al-‘Imari, the bureaucrat-turned-businessman, held the same post six months earlier under Hilali. He was probably the single Egyptian most familiar with the financial aspects of the project, given his ubiquitous presence inside the corridors of the post–World War II Finance Ministry. More crucially, General Nagib’s minister of public works was Murad Fahmi, the engineer who had served as the secretary general of the HEPC in the 1940s. No two figures were more capable and better placed for continuing this now even more crucial piece of development work.

Reports contemporary with these events could not easily narrate the past away, though when al-Ahram (15 February 1953) announced that Nagib’s cabinet had approved award of the main civil-engineering contract to a French consortium, a distinction was made between those phases completed “in past ages” and those at hand “in the age of liberation.” Thirty years later, a one-line account in the same paper reported simply that the original project “was started in 1953…and finished in 1961” (al-Ahram 9 June 1985).

Viewed “on the ground” in the power department’s offices and at the construction site outside of Aswan, rather than from the perspective of the Revolutionary Command Council (RCC), the history of the hydropower scheme would seem to reinforce O’Brien’s point about the continuities marking economic policies. Nonetheless, certain new political factors likely facilitated the process of restarting work on the project. The most important was the closing of the channels—parties, print and parliament—exploited regularly by the shifting and diverse coalition of opponents in the past.

The significance of the authoritarian turn is immediately gauged by the remarkable turn by the new minister of public works, Fahmi. Long known as an opponent of the penstock scheme, he ignored the views of his own one-time superiors at the HEPC and the planeloads of international consultants who had flown in and out of Cairo after the war, and proceeded to build the power station using the alternative tunnel design. This particular feat of engineering was by all accounts impressive. Fahmi added the Swedish consultants, VBB, who back in 1950 recommended against the penstock scheme, to the payroll; he sent the revised specifications out to the 1950 short list of contractors in October; and he was reviewing the new offers by the end of December 1952.^[26]

To the extent that they had to, Fahmi and his cohorts defended the case for the switch in design on two grounds. First, the decision to abandon the penstocks, which were essentially long metal pipes, and the new sluice gates into which they would be fitted meant a reduction in the price of the project (and a savings in hard currency). It also meant a larger share of the costs spent at home since local contractors and labor would be involved in digging the tunnels. Second, they argued that a new set of tests showed that altering the dam’s sluice gates posed an unreasonable degree of risk to the dam’s structure. In essence, this was a variant of the charge opponents had been using since the 1930s (interviews with Geoffrey Kennedy and Benjamin Croft, Thetford, England, August 1986: el-Kholy 1957).

A most significant difference in this arena compared with the earlier 1930s authoritarian interlude (or any period up to 1952) is that Fahmi and the rest of the cabinet were suddenly free of the need to vet these claims before a new “neutral” panel of experts. This freedom was likely to be judged a plus from the standpoint of national autonomy and defended inside the Ministry of Public Works on the related grounds of professional competence. Fahmi’s situation was an Egyptian technocrat’s dream come true. Parliament had been prorogued; the parties wrestled with the regime’s orders to purge their ranks; and the most notorious of an earlier generation of “politicized” public-works ministers, the Wafd’s Muharram, was in jail and awaiting trial in the regime’s new Treason Court. The party presses had of course been shut down. Egyptian engineering circles, where debate on the project had been especially fierce, pointedly ignored the suggestion by the editor of Majalla al-Muhandisin in October 1952 for a new round of discussions on the power project (Moore 1980: 157). And, in a step that seems at once to stand for continuity and change in this arena, Ahmad, the first chairman of the HEPC, was restored to his old position by a cabinet minister who once served directly under him and who, more importantly, buried the design that Ahmad had been promoting for the past twenty years.

The new revolutionary leadership had little incentive, obviously, to emphasize its indebtedness to the institutions of the regime it had just overthrown, but if the pylons went up relatively quickly after 1952, it was due to the groundbreaking work, messy as it had been, carried out between 1945 and 1952. The contracts for the main electrical machinery had been signed in 1947–1948, and the same firms began delivery of the plant in 1956. The tenders for civil works submitted in 1951–1952 served as the basis for Fahmi’s award of contracts, totaling £E 11 million and announced in February 1953, to a set of French and German heavy-engineering firms (al-Ahram 8, 10, 11 February 1953; ‘Abd al-Mu‘ti ‘Abd al-Wahab ‘Amr 1960). Work was finally resumed on site at the end of the annual flood season in the fall of 1953. I found no further sign of the kind of ubiquitous public interventions that had surrounded this project for decades, with a single though hardly decisive exception that came, significantly, in the midst of the bitter power struggle over the authoritarian regime’s future in March 1954 (al-Ahram 15 March 1954).

Summary

The years after World War II were ones of sharp and escalating conflicts, of renewed political mobilization against the remaining vestiges of colonial rule inside Egypt and, by 1947–1948, of war with the Jewish settlers in Palestine and the new Israeli state. The decision of the palace-backed Nuqrashi regime to fight in Palestine helped to shape subsequent American views of Faruq and the “corrupt” Egyptian landowning elite during the last years of the monarchy. But it was the disastrous outcome of the war that shaped subsequent political developments inside Egypt, including the wave of assassinations in 1949, the return of the Wafd in 1950 and the abrogation of the Anglo-Egyptian treaty in October 1951.

Though not usually seen this way, these familiar landmarks of the postwar era highlight how the qualifications originally attached to “independence” in 1922 had generally ceased to constrain the political leadership of the postwar Egyptian state. This is not a claim that Nuqrashi and his successors were free from outside interference, but neither were those who governed after the July 1952 coup. And the opposition to Nagib and Nasser in 1952–1954 rehearsed a theme familiar from the demonstrations of the late 1940s and early 1950s: that the military, like its civilian predecessors, was an agent of imperialism.

Many have since come to adopt the revolutionary leadership’s own preferred narratives of this period, which naturally sought to put as much distance as possible between it and the ancien régime. But the symbolic distancing from the colonial roots of the state was no less part of the project of the immediate postwar leaders and their cadres. In one particularly relevant case, a high official contested a part of the history that I have been excavating in this book, though “the facts” were literally carved in stone. When work on the original Aswan Dam was completed in 1902, a plaque was attached to commemorate what at the time was regarded by some as “the greatest single work ever planned and carried out by British contractors” (Middlemas 1963: 147). The plaque read as follows: This Dam Was Designed And Built By
British Engineers
Egyptians Assisted By Greeks Excavated
To The Rock Foundations And
Built The Rubble Masonry
Skilled Italian Workmen Dressed And Built
The Granite Ashlar

Ahmad Khary, a civil engineer, one of the postwar government’s main experts on dams and a member of the 1945 HEPC, had the plaque removed in 1947, on the grounds that it did “not shed a true light on things” (Egyptian Gazette 19 June 1947). To buttress his case he recalled his own role as resident engineer during the second heightening in the 1930s, though this was decades after the dam had been built. In essence, he was claiming the dam for the new Nuqrashi regime. The chairman of the commission, Ahmad, would do the same for the hydropower project in the late 1940s.

The site had been reinscribed with a radically new genealogy by the time Nasser traveled south for the official opening of the power station in 1960. This process began immediately after the military took power, as attested to by the following 1954 account:

No sooner did the Revolution take up the reins of office than it started to carry into effect Egypt’s most important project which has engaged public attention for over a quarter of a century, namely the Aswan Hydro-Electric Scheme. The project which used to afford material for cheap political propaganda, has now become an accomplished fact.…Under the present regime,…and within the comparatively short period of six months, the project passed through all the preliminary stages, with the result that the country felt a new era of real development and progress has dawned. (Khadr and Hassoun 1954: 46–47)

It seems almost inevitable that the kind of stylized and triumphant text sampled above will appear contrived now. It was, after all, largely the previous progress that made it possible for Fahmi’s ministry to shepherd the project “through all the preliminary [sic] stages” in 1952–1953. And after the timetable for completion was set back by the Suez crisis in 1956–1957, the new authorities perhaps considered earlier such “exogenous shocks”—World War II, the 1947–1948 Palestine War and the 1951–1952 Canal Zone crisis—in a new light. Still, it seems reasonable to argue that the military brought something new and important to the equation after July 1952.

Analysts revisited the history of the Aswan project in the 1970s and 1980s primarily to refute the idea that British power had sought to hinder Egyptian industrialization. “It [the Aswan project], for instance, was not the victim of colonial hostility to Egypt’s industrialization but rather of the clan infighting over award of contract, and the difficulties of financing” (Waterbury 1983: 60 and 1979: 47; see also Tignor 1977b and 1980a). As I have been arguing throughout, in its broad thrust, such a claim is surely correct: British policy generally supported the expansion of its country’s own multinational-oriented engineering and heavy manufacturing firms in territories such as Egypt. But those in Egypt who pointed to foreign opposition to explain the project’s delay were not all guilty of blind adherence to indefensible doctrinal positions.

Chapters 3 and 4 of this book provide numerous examples of efforts by foreign economic and political elites to block or otherwise interfere with decision making on the Aswan project. In the late 1940s, representatives of ICI, the largest supplier of fertilizers to the market, were still pursuing a strategy of diverting the Egyptians from the project for as long as possible. Emphasizing the retarding effects of foreign intervention is inherently no more or less plausible an explanation for why the Aswan project was not built before 1960. To make the point in slightly different terms, the list of factors that might explain the successive delays is in fact quite a bit longer: imperialism, war, bureaucratic infighting, Palestine, shillal (cliques), the composition of Egyptian cabinets, the timing of Egyptian elections, the technical capacity of public agencies, party rivalries, bribery, the competitive structure of international markets, the needs of Chilean fertilizer exporters, and so on. Explaining why the Aswan hydropower scheme was not built in Egypt (that is, why something did not happen) is logically equivalent to explaining why the bourgeoisie failed to transform Egypt.

The long history of successive bargaining rounds has nonetheless provided a unique vantage for studying the evolution of the bargaining capacity of local capitalists over time. ‘Abbud had joined Docker’s consortium in 1927, seeking, realistically, to obtain a share of the profits in return for securing the government’s support for what, if their plan had been adopted, would have been a predominantly foreign-owned concession company. Nonetheless, by the 1940s, ‘Abbud was promoting the project as his own, Egyptian-owned power-generating station and fertilizer factory, for which the foreign firms would supply the plant and expertise.

In the same way, the case underscores the basic, though often forgotten point that the scope and precise nature of state involvement in these two sectors was politically determined. As late as the 1940s, ‘Abbud and his allies still envisioned the private appropriation of the Nile’s power-generating resources as a plausible outcome. Public ownership of the hydropower plant was contested, and the contest appears to have been settled by 1945–1946, at which point ‘Abbud and his allies apparently gave up their efforts to build and run the power plant as a private concession. In a similar way, local capital clearly demonstrated its preference and intent to run the various proposed chemical manufacturing plant as a private venture, but, in 1956, the state nonetheless emerged as majority owner in the new Aswan (Kima) fertilizer-factory joint venture. The political roots of the entire range of now naturalized views about what the private sector ostensibly could not or would not do, together with the claims about what the state ostensibly had to do after 1952, need to be rethought.

This unfolding contest over a new postwar regulatory regime reflected both the effects of the reorganization of economic administrative agencies during World War II and what analysts correctly point to as a postwar resurgence of “political and economic nationalism” (Tignor 1984: 175–176, 179–195, 213–214). But a contest was ongoing over the precise terms of economic nationalism or over competing nationalist projects. Investors viewed and promoted Egyptianization as a means to continue to privatize resources. In the Aswan case, this outcome was successfully avoided.

Finally, the details of the conflicts that I have been examining here, with their implications for understanding the factors that shaped the scope and pace of industrial investment after the war, are usually obscured in the conventional narratives of industrialization; these narratives are written generally as a parable of failed national-class formation and the seizure of power by army officers in July 1952 imagined as the logical culmination of a process of economic change steered unsteadily by the weak bourgeoisie.

Over the years, the disparate currents and historically contingent effects of a complex, overdetermined conjuncture (the “crisis” of 1950–1952) have been presented, somewhat too unreflectively, as a revolutionary situation, with the political economy made to appear spiraling downward, the elite establishment paralyzed, society “inflamed” and in ferment “from below,” Egypt inexorably sliding “into chaos” (Baker 1978: 1, 10; Tignor 1984: 242; Beinin and Lockman 1987: 395–398; Botman 1988: 115).

I propose to look at the crisis or crises of 1950–1952 afresh, from the vantage of the end of World War II and the opening of a new phase in Egypt’s postcolonial history when it was being steered by a cautiously confident, reactionary-capitalist elite that was trying to reconsolidate its authority while navigating the complexities of the unfolding postwar world order. The investors whose strategies and political choices I have been analyzing most certainly did not act as if the postwar years were harbingers of some latent, near-future upheaval, and they would be hardpressed to recognize themselves in the descriptions that typically follow from the familiar conceptualization of elite views at the height of the crisis: resigned and helpless to prevent the collapse of the old regime.

Certainly, the idea that after the war capitalists were too timid to undertake necessary investments or act forthrightly to implement the reforms that they knew were in their own best interests seems to be wrong. Accounts of the post-1945 political economy remain heavily tied to these particular premises among others in which the successor, revolutionary regime’s own official histories were deeply invested. As I will try to show, the real problem for many in Egypt (and, keep in mind, the hope for many others) was that the Wafd and the investors who dominated the party seemed to offer a way out of the political impasse that followed the burning of downtown Cairo in January 1952.

Notes

6. Indigenous Roots of Egypt’s Socialist Transformation: The Revolt against Business Privilege

It was in order to remove the obstacles to development by enacting basic reforms and allowing Egyptian capitalism to realize its full potential that the Free Officers seized power in July 1952.

Then the revolution came in 1952 to impede the development of Egyptian capitalism even while permitting the establishment of a capitalist system in the technical sense.

On 23 July 1952, a small group of junior army “free officers” launched a successful coup d’état in Egypt, and as they went on to consolidate their power and forge a social coalition to support their rule, they defended their actions in the name of “revolution” (Gordon 1992: 3). Many of the junta’s earliest and most ardent supporters—for instance, the Ruz al-Yusuf columnist ‘Ihsan ‘Abd al-Qaddus and the American ambassador in Egypt, Jefferson Caffery—doubtless saw in the July 1952 Revolution confirmation of both the fatal shortsightedness of the ancien régime in the face of social unrest and the wisdom of the reform path that had been urged upon the king without success. As a result, Faruq was deposed within days of the coup, and by September 1952 the army passed the country’s first comprehensive land-reform law. In the following months, parties were banned, and, thirty years after its birth, the 1923 constitution was buried.

The subsequent course of the Revolution—from a U.S.-supported, Peronist- or Cardenas-styled “national-popular” dictatorship (Maxfield 1990) under Nasser in the mid-1950s to a Soviet-backed “Arab-socialist” experiment in the 1960s and beyond—remains a defining focus of empirical investigation and theoretical debate among most subsequent analysts of the political economy (e.g., Issawi 1954, O’Brien 1966, Abdel-Malek 1968, Hussein 1977, Trimberger 1977, Cooper 1982, Waterbury 1983, Hinnebusch 1985, Zaalouk 1989). By contrast, neither the interpretation of surface events nor the deeper historical process underlying the July 1952 coup d’état and subsequent regime change are seen as significant analytical problems, with the single exception of defining the mode of production in the countryside (‘Abd al-‘Aziz Ramadan 1981, Owen 1981b, Richards, 1982). But this consensus itself needs some sharp questioning, beginning with what Gordon says is “too often taken for granted” (or at least taken too literally) by analysts, namely that “Egypt stood on the brink of a social revolution” when the army conspirators seized power (1992: 5).

The objective of this final chapter is to return to the idea of the Egyptian Revolution as the outcome of a failed national-bourgeois project launched in the 1920s. More accurately, it is to return to those foundational assumptions about class structure, interests and agency that are derived from colonial-exceptionalist narratives of political economy. As I first noted in Chapter 1, most claims about capitalists and politics until now are essentially about the Revolution, histories written backward to deduce Nasserism as an outcome of the exceptionalist circumstances of colonial capitalist development. For those whose reassessments of this narrative strategy will turn on empirical or internal-validity issues, it is important to show the ways in which the archival sources challenge basic claims about the alleged preferences and choices of Egyptian capitalist and party elites at a critical juncture.

The first section of this chapter offers a revisionist view of the 1950–1952 Wafd government, which in nationalist and exceptionalist historiography is portrayed by Revolution’s eve as the instrument of the large landowners and led by an elite that was either unable or unwilling to implement the most crucial parts of the bourgeois project (agrarian reform, a more equitable distribution of wealth, and accelerated industrial development). And, from this particular conception of what allegedly constituted Egyptian investors’ basic interests, Egyptian marxists argued that the postwar industrial bourgeoisie was “generally hostile to the Wafd” (Beinin and Lockman 1987: 10–11, 395–399).

I show that the Wafd party was more nearly the instrument of the entire business oligarchy—that is, the main Egyptian investment groups and thus the core of the country’s industrial sector. These leading Egyptian capitalists quite rationally tended to ignore or oppose issues like land reform in the absence of positive inducements or credible threats. In other words, those most heavily invested in industry were least invested in ideas such as land reform and other forms of redistribution. Nor were such proposals more convincing when posed in terms of facilitating long-term growth, particularly when weighed against the party’s strategy of enriching its business wing in the short term.

The second section of this chapter turns to the series of post-Wafd cabinets between January and July 1952, which are given little specific attention in the left’s historiography and are instead absorbed into the larger narrative of incipient political-economic collapse. For instance, in Botman’s history of the Egyptian communist movement, these events are background to an end already foretold: some counterestablishment force would have to take power. “A crisis of governing existed: no stable government could preside from above,…and from January to July 1952 four Cabinets succeeded one another.” For the left, the basic concern has long been why the communists, as opposed to the military, did not “capture the moment” (1988: 115)

Since I am not as sure what these complex events foretold, my questions are different. Why did the Americans and British, who were centrally involved in these events, favor the Wafd’s downfall in 1951? Who were the investors most centrally involved in this six-month-long crisis in 1952? What were the stakes? Was there no way out for the establishment? Working through the details of the successive and open-ended games among British, Egyptian and American elites is crucial because only by ignoring them can a structural account of the Revolution as an outcome of bourgeois failure or of a regime inevitably facing its final days be made to appear empirically plausible.

Finally, I no longer find it convincing to see the army conspirators as history’s agent in this instance, acting so that capitalism could “realize its full potential” (Beinin and Lockman 1987: 12). In the third section, I turn to the rapidly unfolding confrontation with capitalist privilege and the challenge posed for the business oligarchy by U.S.-backed etatist and antimonopolist currents inside the new regime.

I can imagine two kinds of objections to my account and want to address them at the outset. First, the chapter is not intended nor should it be read as a new and comprehensive reading of the foreign-policy dimension of the unfolding Egyptian crisis of 1951–1952 as it is usually conceived. I am fully convinced of the priority that both London- and Washington-based elites accorded to military and strategic considerations at this critical juncture, even if I do not emphasize them here. But even the most sensitive diplomatic historians or others who use the diplomatic archives have tended to read these texts uncritically in discussing Egyptian domestic politics.

Second, though I concentrate here on Egyptian elite actions, I do not want to be read as implying that the mobilization of relatively large segments of workers and other parts of urban political society was unimportant to the way in which the Canal Zone crisis unfolded, or since I dispute conceptions of Egypt on the verge of revolution, that I am arguing that no crisis existed. Clearly, the Wafd party leaders faced a significant challenge to their rule. In 1951, contenders for power threatened to outflank them on the nationalist issue, leading to the decision to abrogate the Anglo-Egyptian treaty. Rather, I open up for question here the tendency to reduce the Wafd’s decision making to a matter of a “wrong” choice on the basis of a misconceived idea about the collective needs and actions of capitalists.

The 1950–1952 Wafd Government: Big Business Finally Has Its Party

The ‘Abbud group invested heavily in what Gordon (1989) has termed the Wafd’s “last hurrah”—the remarkable election victory in January 1950 that secured for the business-backed, Sirag al-Din wing of the party two years of unrivaled and virtually unchecked control over state power and resources. The country’s most powerful local Egyptian investors like ‘Abbud, the Alexandria-based Yahya and Farghali groups, al-Misri owners Mahmud and Hushamza Abu al-Fath, Muhammad al-Wakil and the Sirag al-Dins championed a conservative reform agenda that amounted to funding their own private engineering, trade and industrial ventures; reversing the mild etatist thrust of the previous three years; and conceding as little as possible to the redistributive project favored by the Wafd’s left wing.

Clearly, those who championed and articulated various versions of etatism or the restructuring of property rights in the countryside reflected a variety of ideological orientations, but just as clearly the country’s largest industrialists tended to see such a project as retarding rather than promoting Egyptian capitalism, and the explanation for this view cannot be reduced to the fact that they had holdings in land as well as industry. Barring a wholesale conversion of this property-owning class to the view that redistribution was a value in its own right, the highly dubious, future-oriented utilitarian rationale—the fallahin as a new consumer market—could hardly outweigh the concrete costs. From the perspective of the oligarchs, the national economy (and their pockets) could ill afford welfare measures at the expense of more immediately productive investment. Certainly, for many circa 1950 there seemed to be no compelling reason to alter this calculus. Instead, leading capitalist oligarchs like Sidqi, Sirri, Sirag al-Din, ‘Abbud and ‘Afifi preferred the time-honored mix of repression, religion and nationalism for containing counter-establishment currents.^[1]

Ironically, the left’s preferred interpretation of the Wafd’s return to power in January 1950 seems as wildly off the mark as the predictions of various interested parties at the time, from the Times correspondent (and ardent Nuqrashi supporter) C. D. Quillam to U.S. Ambassador Caffery. It had been generally assumed that the king and his advisers would never let Nahhas and the Wafd return to power. The Times’s editors scoffed at charges that Sirri was favoring the Wafd, applauded his efforts to focus attention on “building, industrialization, development schemes and social legislation,” and all but endorsed the rigging of the vote. Thus, the “main problem” was “how to conduct the election so that a balanced coalition will be returned without unduly interfering with the choice of the electors” (the Times, 17 October 1949, emphasis mine). Yet Sirri, though commonly identified as the “king’s man,” personally helped orchestrate the party’s comeback, by choosing to run a fair election. His business partner, ‘Abbud, poured cash into the Wafd’s machine, the party went on to win an absolute majority in parliament and, though the king was reportedly stunned at the outcome, Nahhas was ultimately invited to form a new government.

The American officials in Cairo who were trying to puzzle out the turn of events assumed that the king must have miscalculated Sirri’s “willingness to act in his own interest.”^[2] But the businessman who had brought Sirri into his expanding industrial empire and whose economic ventures had become synonymous in Sirri’s mind with Egypt’s future prosperity (not to mention his own) had made clear where his interest lay. By then, no ancien régime figure was more closely associated with the ‘Abbud group. In the aftermath of the elections, Egypt witnessed an unprecedented degree of conciliation between party and palace (Gordon 1989, Tariq al-Bishri 1983). What has gone unnoticed until now, however, is the loose alliance of investors who served as the bridge—Sirri, Elias Andraos (another of the king’s advisers who directed the Misr group–Bradford Dyers joint venture), the Sirag al-Dins and ‘Abbud. And though the left sees in the Wafd’s alleged deference to the monarchy unmistakable signs of both crisis and paralysis, again based on a questionable idea of what capitalists would have done if they were an independent and self-confident bourgeoisie, the flurry of activity in the months that followed suggests that investors at the time were viewing a different and far rosier horizon.

Egypt Incorporated

The 1950 Wafd government’s basic economic strategy emphasized publicly supported and privately guided infrastructure investment, rural public works, housing construction, “model villages,” land reclamation and industry building, which, its proponents argued, would lift the standard of living for the population. One thing for certain is that the strategy increased employment in the public-works sector and augmented the ranks of the contractors registered with the Federation of Industries, as investors hoisted billboards in Cairo and the provinces advertising their new ventures: the Egyptian Engineering and Construction Company (‘Abd al-Qawi Pasha’s joint venture with George Wimpy and Company); Al-Shams (Sirri, ‘Afifi, Mahmud Shukri and French investors); Al-Shark (newspaper owner Mahmud Abu al-Fath and locally resident foreigners); SOTRAC (the Shihata family and Hamid al-Qaddah, among others); L’Enterprise de la Maison Nouvelle (a new British construction venture that had the aging leader of the Nationalist Party, Hafiz Ramadan, as its president!); and HABECO (Mukhtar Ibrahim, the Rabbath group and the Shihatas).

While the Wafd pressed ahead with the infrastructure and industrial-investment schemes, it also introduced new and at the time unprecedented programs for universal, free primary, secondary and technical education; increased subsidies for basic foods; rudimentary health care in the countryside; and social-security and minimum-wage provisions in the cities (Tignor 1982; Gordon 1989). The administrators of some of these initiatives were identified as protégés of Najib al-Hilali, a member of the Wafd executive and Sirag al-Din’s main rival inside the party. I want to consider the government’s programs and investors’ responses to them with some care because there has been a tendency to reduce the policy process to the issue of corrupt party insiders battling reform-minded outsiders—that is, in terms of the rise and fall of Hilali and “his men.”

At least two different and conflicting policy initiatives are usually lumped together as reforms and identified with Hilali’s protégés (ignoring those investment- and production-oriented policies discussed here and in Chapter 5 that after July 1952 were touted as reforms by the Free Officers). On the one hand, there were the new spending programs associated with the government’s two most progressive appointees, Taha Hushamza, the Egyptian author who headed the Ministry of Education, and Ahmad Hushamza, son of a Wafd party notable and a future ambassador to the United States who skyrocketed to prominence at the Ministry of Social Affairs (Akhbar al-Yawm, 14 January 1950; al-Ahram, 30 November 1984). These ministers dreamed of building schools and health clinics across the country. On the other hand, there were the efforts by the new finance minister, Zaki ‘Abd al-Mut‘al, to curb spending and extend the regulatory authority of the state, essentially along the lines favored by Nuqrashi’s government in 1947–1948. Clearly, these two impulses were in conflict.

Investors complained about the costs associated with the new welfare programs. The ultraconservative Sirri Pasha branded Taha Hushamza an extremist, and ‘Abbud, less viscerally, grumbled to the British about Sirag al-Din’s failure to ride herd on the two young and idealistic ministers. Similarly, the opposition Sa‘dist party head, ‘Abd al-Hadi, protested to the Americans that Ahmad Hushamza’s social-security program was a waste of taxpayers’ money and a diversion of scarce resources from industry (that is, from the pockets of ‘Abd al-Hadi and allied businessmen).^[3] Nonetheless, I would argue that business-group heads and their allies generally substituted talk for collective action in this arena, found ways to defray the costs and, at worst, resigned themselves to these programs.

For instance, when Hilali’s protégé (and a favorite contact of U.S. Ambassador Caffery) Ahmad Hushamza resigned, dramatically, in June 1951 after eighteen months in office, his defeat in an interministerial tug-of-war (along with, for obvious reasons, his preferred explanation for it) was absorbed into the general antireform brief then being assembled against the Wafd inside the U.S. embassy. But Hushamza’s programs themselves were simply not the target and certainly were not the target of the business interests most closely tied to the Wafd. The American embassy reported that ‘Abbud himself had intervened to try to keep Hushamza in the cabinet, no doubt in part for narrow reasons since ‘Abbud’s daughter was married to Hushamza’s brother, and such elite-family connections carried a premium. More broadly, though, party leaders appreciated the contribution that these programs made to holding together the Wafd’s electoral coalition, though sometimes the cynicism was hard to disguise. Thus Sirag al-Din objected when an editor of al-Ahram (9 September 1951) described him as a capitalist. “I wish to affirm an undoubted fact that I am a convinced socialist, that the Wafd is a socialist party and that the present government is a socialist government.”^[4]

Segments of the American intelligence community at the time took Sirag al-Din’s pronouncements seriously, if not literally, describing them as part of a “deliberate domestic political strategy” of controlled change to shore up the upper class of a “society [that] might well be characterized as reactionary capitalistic (in the opprobrious sense of the latter term).”^[5] The writer pointed to personalities inside and outside the party—Sirag al-Din, ‘Abbud, the independent ‘Azzam Pasha (from a family of big landowners in Giza), as well as Ahmad Hushamza—as lending support to this effort. I have identified others, like the Yahyas (generally not linked to Egyptian party politics) and Saba Habashi, prominently linked with U.S. oil companies and, until 1950, a member of the opposition Sa‘dist party.^[6]

The more vital concern of the party’s “reactionary capitalists,” Sirag al-Din chief among them, was the reforms championed by Hilali’s ally at finance, Mut‘al, whose antispending brief and attempted extension of regulatory powers brought him into conflict with an array of powerful investors. His ministry clashed directly with the party’s business allies in at least three basic arenas, which led to his downfall before the year’s end. I have already discussed one of these conflicts in Chapter 5: Mut‘al’s opposition to funding the country’s biggest industrialization project at Aswan. In other words, Mut‘al’s reforms entailed a curb on the Wafd government’s modest public spending levels.

The second conflict involved the regulation of the Alexandriacotton-futures market, which the wartime economic authorities had closed in 1940 and which Sirri’s government reopened in September 1949. The ministry’s attempt to control its operations during the height of the Korean boom put it on a collision course with the largest exporters, most notably the Yahyas and Farghali, whose influence in the cabinet and palace enabled them to counter Mut‘al’s ministerial authority. The irony is that many of these same investors welcomed the kinds of regulatory policies championed by Mut‘al as the market began to collapse one year later, though by that time he had been forced from office.

The third conflict involved the decision by agencies of the Finance Ministry to proceed with the claim for some £E 10 million in back taxes from the Misr and ‘Abbud groups. In a matter of months, the politically artless finance minister had managed to align the country’s most powerful private institutions against him, but the details of this sectoral conflict were obscured as the Wafd’s political opponents fed the rumor mills with a stream of lurid stories about collusion among the “cotton lords,” rigged markets and speculative fortunes flowing to the bank accounts of Sirag al-Din, Nahhas’s wife and her relatives (Gordon 1989: 204, 207). An alternative picture emerges in the reporting by the U.S. embassy’s economic officers.^[7] The Egyptian prime minister finally asked for Mut‘al’s resignation in November 1950.

The 1950–1952 Wafd government’s approach to regulation was pre-eminently self-regulation by the country’s (and party’s) biggest industrial investors. In other words, the business oligarchs extended the process of rationalizing various sectoral holdings and transforming the Bank Misr offices into an executive coordinating committee of Egypt’s leading firms and sectors. “Business investors have available a unique means for solving some collective action problems: mergers and acquisitions” (Devereux 1988: 29).

In Chapter 3, I noted the beginning of this process in the formal cartelization of the textile industry by the Misr and Yahya groups. In Chapter 4, I underscored the significance of ‘Afifi’s bringing the Yahya family—though they were ostensible competitors in textiles, shipping, cotton exporting and insurance—onto the Bank Misr board. By 1945, the Alexandria Navigation Company (Yahya) and Misr Maritime Navigation Company had merged their operations.^[8] ‘Abbud’s shipping firm was linked via a formal consortium with the merged fleet by 1953. This process was further extended with the Wafd’s support in early 1950. Under the auspices of the oligarchs, proposals first raised in 1947–1948 to nationalize tram and bus service in Cairo were reconstituted as a new private-monopoly joint venture of the Misr and remnants of the Empain (Belgian) groups—in others words, the consolidation of the entire Cairo transport industry under the auspices of Bank Misr (Egyptian Gazette 9 February, 22 July and 7 November 1949, 21 June 1950). Workers in the main transport union opposed this move and called instead for nationalization of the transport industry (Beinin and Lockman 1987: 407).

Along these same lines, the party leadership’s distinctive approach to “commanding the heights” seems to be reflected in the unfolding organization of the new and controversial Ministry of National Economy, charged with administering what amounted to a rudimentary trickle-down strategy of development. Specifically, under a renewed mandate and with a reshuffled administration following its first rocky months of existence, the ministry appointed ‘Abbud, ‘Afifi, Andraos, Yahya and their cronies to its new, oligarch-dominated advisory council.^[9]

But the Wafd’s most significant contribution to oligarchic consolidation was the backing given to ‘Abbud, who, in November 1950, despite the suddenly ineffectual opposition of the bank’s chairman and his longtime foe, ‘Afifi, was invited to join the board of Bank Misr. Recall that this was a goal that had long eluded ‘Abbud, though he was one of the single largest stockholders in the bank by 1944 and apparently remained so until its nationalization in 1960. The ground was prepared for this new alliance with the Misr group (‘Afifi notwithstanding) in 1949, when ‘Abbud and Yahya agreed to serve as coinvestors in a joint venture with U.S. Monsanto to manufacture DDT. ‘Abbud’s political ties to the Wafd helped clinch the position, which he then occupied for the next seven years. Yahya and others within the bank’s leadership presumably saw the logic in cooperating with ‘Abbud, though Sirag al-Din made no secret of the government’s capacity to influence appointments to the board.^[10]

The core owners and directors of the country’s largest enterprises lined up behind the Wafd, with industrialists like ‘Abbud (using Sirri) and Andraos of the Misr group (one of the king’s main advisers) working constantly to smooth relations between the cabinet and palace, and, again in ‘Abbud’s case, to manage the Wafd’s relations with the British and American embassies. ‘Abbud was essentially Sirag al-Din’s main conduit to Caffery. In return, the leaders of the Wafd’s unofficial big-business federation were showered with rewards and subsidies, including Senate appointments (‘Abbud, Andraos, Farghali, Shishini); tax exemptions (the ‘Abbud group’s still unfinished fertilizer factory, the Misr Group’s synthetic-silk factory); protection for their sinecures (the reorganized transport market, the sugar monopoly, the shippers’ cartel); and Sirag al-Din’s intervention on behalf of cotton exporters (Yahya and Farghali) and the petroleum sector (Habashi, a lawyer on retainer for ARAMCO and a “mediator” in the cartel’s price dispute with the state).^[11]

Most critically, these investors enjoyed regular, direct, effective—and, one is tempted to add, exclusive—access to governing officials, along with the flexibility to shift the costs associated with postwar price controls, job-security provisions and wage legislation. Thus, according to the account in Beinin and Lockman’s Workers on the Nile, ‘Abbud could rely on the “people’s party” to arrest the entire union leadership at the Hawamadiya refinery for calling a strike in order to force ‘Abbud to comply with the government’s year-old (and ignored) cost-of-living decree. While the organizers languished in jail, ‘Abbud was plied with further tax abatements to induce him to resolve the dispute.^[12]

National Capital

Clearly, no investor benefited more from the Wafd’s return to power and Sirag al-Din’s dominance within the party than ‘Abbud, who had arguably attained the height of his influence in the Egyptian political economy in 1950–1952. The ‘Abbud group added new ventures and holdings to its bulging investment portfolio. They imported buses and trucks to supply the group’s transport companies in Cairo, the Delta and Upper Egypt. ‘Abbud expanded into textiles by buying the Nuzha Spinning and Weaving Company. He modernized the old Cozzika family distillery in Turah; took over as chairman of the board of the old Suarès-Cassel land-development enterprise in upper Egypt, the Kom Ombo Company (which produced sugar cane for the factory); and had himself named chairman and managing director of the Upper Egypt Hotels Company (owners of the Winter Palace and Cataract hotels), spreading his involvement in the southern region’s economy still further. Newspaper articles at the time regularly referred to him as one of the richest men in the world (Akhbar al-Yawm 7 June 1947 and 31 August 1948; Egyptian Gazette 1 November 1950; al-Musawwar 2 March 1951 and 18 July 1952).

‘Abbud promoted himself as the leading force in Egypt’s national economic renaissance, working tirelessly to expand jobs in rural and urban Egypt, to create investment opportunities for the middle class, and to Egyptianize the country’s economic institutions. The financially strapped al-Akhbar chain, among other presses, happily ran pages of these thinly (if at all) disguised self-advertisements, which are still on file in the paper’s archives, even during the period when publishers Mustafa and ‘Ali Amin were organizing against the ‘Abbud-backed Wafd government, as I will detail below. Thus, when he was elected president of the Ahli (National) Club in November 1949, the club was framed symbolically against the vestige of colonialism next door, the Gazira Club, where Egyptians still constituted a minority and weresecond-class members. With the help of Sirri, Nahhas, and Sirag al-Din, as well as the British and French embassies, ‘Abbud gained entry in 1950 to an equally exclusive foreign enclave: the board of directors of the Suez Canal Company, after the Paris-based administration tried for months to reject the government’s new nominees. In his new hyperbolic nationalist style, ‘Abbud declared his membership to the board of the canal company to be the harbinger of the renaissance of the Egyptian navy (Egyptian Gazette 23 October 1949, 8 August and 8 November 1950; Akhbar al-Yawm 15 and 29 October 1949, 14 January 1950; Picot 1978: 22–24).

But his $24 million chemical-factory complex, nearing completion ten miles southwest of Suez, was arguably the potentially more valuable contribution to the national economy. Delays in the delivery of machinery ordered in England and the switch from U.K. to U.S. and European suppliers pushed back the start of operations at the plant from 1950 to the summer of 1951. The plant was, however, plagued by a host of design flaws and shoddily built equipment, according to the main construction supervisor, and ‘Abbud was forced to absorb the costs of an immediate, four-month-long overhaul. When production was finally resumed, late in 1951, operations would be disrupted by the political disturbances in the Canal Zone that followed the government’s abrogation of the 1936 treaty with Great Britain.^[13]

Even before the original plant was finished, ‘Abbud had started to arrange with U.S. firms to expand the product line of the fertilizer complex and, with W. R. Grace and Company, to build his own paper mill near Cairo for packaging the fertilizers produced at Suez. He submitted an additional $5.2 million funding request to the ExIm Bank; bank personnel had reviewed the proposals favorably when, in the winter of 1951, the Truman administration blocked ‘Abbud’s loan together with the Wafd government’s project proposals then before the World Bank. The Wafd leaders and their allies were unlikely to have missed the point. U.S. Ambassador Caffery had appealed to Nahhas not to cashier the fifteen-year-old canal-base treaty. And as the crisis quickly escalated into clashes between British troops and Egyptian volunteers, the Americans momentarily closed ranks with the Churchill government.^[14]

There are thus two points to keep in mind about a period that is conventionally portrayed as one of profound social crisis—an era of violence and revolution. The first is that ‘Abbud and allied investors seem to have assessed the situation somewhat differently from virtually all later historians and analysts if we use as an indicator ‘Abbud’s plans for new investments in this period. This is not to claim that politically powerful capitalists like ‘Abbud or the Sirag al-Dins, who founded the new Banque du Caire in the spring of 1952, provided the more accurate or objective assessment, but, given their obvious investment stake, can we afford to ignore these apparently bullish views?^[15]

The second and related point concerns the sudden and dramatic conversion of the U.S. and British embassies to the view of the Wafd as a party whose corruption and failure to move forcefully or far enough toward reform was the real problem facing Egypt at this juncture. Quite strikingly, it was during the summer of 1951, precisely as the Wafd escalated the stakes in the Anglo-Egyptian arena, that the embassies began radically to revise their view of Egyptian politics and society. For instance, as late as 28 April 1951, Caffery believed that “at no time in recent Egyptian history has the Party or Cabinet seemed more secure and in a better position to look to the future with confidence than can the present Egyptian Government.”^[16]

The Americans’ assessment was hardly surprising. One month earlier, in March, Sirag al-Din had forced a powerful bloc of outraged landlords in parliament and his own party to back down on their threat to oppose the 100 percent increase in the tax rate on agricultural land that he had imposed as finance minister and made retroactive to 1949. The battle in the legislature is significant for a number of reasons, not least because it clearly contradicts the claim that Sirag al-Din and the landlord-dominated Wafd were unwilling or unable to undertake reforms in arenas like taxation. According to Caffery’s account, Sirag al-Din marshaled support in the press and the streets for his position, which he turned into a vote “of personal confidence…in his policies as Minister of Finance,” and scored a surprising victory. The outcome of this confrontation with the landlords had Caffery convinced anew of the Wafd’s political strength and popularity and the Americans determined to press ahead with an aid program.^[17]

Yet, together with other like-minded realists, within the space of months Caffery had turned upside down his appreciation of the domestic scene, until it was virtually indistinguishable from that of newspaper owners Mustafa and ‘Ali Amin, whose stock, like that of other die-hard elite opponents of the 1950 Wafd government, began to climb at the U.S. embassy in the summer of 1951. The vague, authoritarian-leaning anticorruption and internal-reform plank put forward by these counter-elites was the only possible alternative around which these businessmen might hope, however remotely, to build an opposition to a government—and here was the crux of the problem—that had simultaneously deflected the antiregime activities of groups like the Muslim Brothers and, arguably, augmented the ranks of supporters via a renewed campaign against the British occupation.^[18]

There was thus a striking resemblance between the timing and form of the shift in the Americans’ stance toward the Wafd in mid-1951 and the British state’s own anti-Wafd turn in the summer of 1944. Quite logically, in both cases, specific and sharp policy disagreements preceded the discovery that the oligarchs were indeed too corrupt to undertake supposedly vital internal reforms. A comparison with Caffery’s own judgments about King Faruq at this time is profitable.

Faruq was reportedly complaining to the Wafd cabinet about the problem of inflation. Caffery argued that “[e]ven though the cost of living is certainly a fundamental problem of primary importance, this emphasis on a perennial issue at this particular time when the Anglo-Egyptian question, the Army inquest, and the Opposition’s campaign for a purging of the Palace entourage are all approaching an important climax strongly suggests the presence of a ‘red herring.’ ”^[19] And, of course, in this sphere Caffery was no less cynically imperial-minded than Lampson. More crucially, however, he was also generally no more clear than his British counterparts or those elite factions seeking to replace the government in defining these vital “reforms” or assessing the rate of progress toward them.

At the center of the “honest opposition” (Caffery’s phrase) to the “Sirag al-Din–‘Abbud Party” (to quote British ambassador Ronald Campbell) were a competing set of businessmen and technocrats, including the ‘Amin brothers, who owned the al-Akhbar group; ‘Afifi, the director who unsuccessfully opposed ‘Abbud’s membership on the board of Bank Misr and who in August 1951 attacked the Wafd’s foreign policy in the pages of al-Ahram; Galil al-‘Imari, a rising star in the business community and a director of U.S. Anderson Clayton’s cotton-exporting and cotton-seed-oil manufacturing subsidiary; landlord-turned-investor Sayyid Mar‘i; the young, aristocratic social engineer Ahmad Hushamza; and related members of the networks in which these elites were enmeshed (e.g., ‘Ali Shamsi Pasha, Hushamza Fahmi, Hilali Pasha).

Their motivations for opposing the Wafd government at this particular juncture were no doubt complex, but the factor that I want to draw attention to here, in part because it has not previously been discussed, is the obstacles they found in the way of their own ambitions. As we have seen, access to state-mediated resources (or a connection with those investor coalitions who had access to them) was the sine qua non for ambitious would-be capitalists. But the barriers to entry in the various oligopolistically structured sectors were formidable, and the oligarchs’ grip on state power meant that the opportunities for private accumulation represented by the new round of big irrigation, electrification and manufacturing projects like the proposed Aswan iron and steel factory were effectively lost.

It was no accident, therefore, that the strategies of these new, would-be capitalists resembled the path followed by ‘Abbud in the late 1920s, when he first began to compete with the Suarès, Misr, Salvagos and Empain groups. They sought partnerships with foreign firms. More crucially, like ‘Abbud, who used his British political connections to good effect, elites like Hushamza and the Amins (and those in their employ like Muhammad Haykal) turned to the American embassy and the CIA. Most important, though, these new investors dusted off and hoisted the same standards of progress and reform (together, of course, with the warnings of impending chaos) that frustrated competitors like ‘Abbud raised as justification for supporting the authoritarian project between 1928 and 1935.

The Twilight of Palace Pluralism and Business Oligarchy

The Wafd’s audacious act of brinkmanship in October 1951 in canceling the Anglo-Egyptian treaty divided the national political arena and its constituent groups into two complex, sharply polarized, lopsided camps. On the one side was a “reactionary capitalist” Wafd party elite leading what is referred to in Egyptian historiography as the national movement (al-haraka al-wataniyya), including its own left-wing (the Wafdist Vanguard), Muslim Brothers, large parts of the organized workers’ movement, and the dissident army officers who would later organize a coup against King Faruq. This alliance, though undoubtedly driven in part by the fear that a mobilized and armed movement might spiral out of control, gained the Wafd strong support at a critical moment, while producing some incongruous events—for example, Sirag al-Din helped the Free Officers smuggle a mine into the Canal Zone, and Egypt’s leading industrialist, ‘Abbud, ostensibly moved by the patriotism of workers who had left their jobs at the British bases, pledged one million Egyptian pounds of his own to the strike fund he was promoting!^[20]

Arrayed against this relatively broad bloc of Egyptians were those elements of the liberal establishment who had either been locked out of power by the Wafd or else were less confident than Sirag al-Din that a minor guerrilla war in the Canal Zone would not end in disaster for Egypt. It is plausible that these are the elites who are given the collective designation “industrial bourgeoisie” in some historical accounts, despite the label’s poor fit with the actual investment portfolios and political preferences of leading anti-Wafd businessmen like the Amins or Sayyid Mar’i. Gravitating to their side were those parts of the left either unconvinced or else threatened by the Wafd’s brand of anti-imperial struggle (Botman 1988: 93, 112–113). It is not surprising that the disparate set of minority-party politicians, landlords, businessmen, royalists and technocrats counterpoised and tried to rally supporters around a project of domestic social reform and anticorruption. After three decades, the basic formula for unseating a democratically elected government remained the same: join forces with the king and the imperial power.

The Truman administration’s growing, active interest in Egyptian affairs and its emerging fixation with instability worldwide, which were hallmarks of post-Kennan global strategy, meant that the U.S. embassy loomed increasingly large as a site and focus of elite Egyptian political activity. Caffery dutifully recorded the appeals for U.S. support and the progress of various proposals: from the prospective purge of the party leadership or the creation of a nonparty salvation cabinet to the formation of a “New Wafd” party. Though the British embassy, primarily through the Amin brothers, encouraged the idea of overturning the Wafd, its own capacities were limited, and the Americans were extremely wary of taking sides in this lopsided domestic power struggle—at least officially. No wonder, therefore, that the situation seemed so bleak to certain opposition figures like the former minister Ahmad Hushamza, even as he outlined plans for a palace-backed cabinet purge to the U.S. ambassador.^[21]

Nebulous as it was, the basic plan—to dismiss the Wafd and install a government more genuinely committed to tackling the problems of corruption and social inequality—had little chance of winning the unqualified backing of the king or his more astute advisers. At no time was the palace more wary than in the months after October 1951 of the dangers in siding openly with the opposition (and the “imperialists”) against a government leading such an obviously popular struggle. Nor is it clear that the question of corruption actually mattered very much to politically mobilizable opinion, with perhaps the single exception of the charge, which predated the Wafd’s return to power, implicating various members of the king’s family and his entourage in illicit profiting from arms sales during the Palestine War (Gordon 1989: 193). Clearly, though, as the conflict over the Suez-base policy deepened, elites like the Amin brothers and others seeking the government’s fall recognized that the corruption theme was valued by their embassy contacts who were fed a steady diet of such charges.^[22]

The well-worn accounts of Wafd malfeasance—drawn from the infamous (and misogynist) exposés of the prime minister’s wife and her family in the Amin brothers’ press (after all, they needed to sell newspapers) or the sensational charges against the Wafd leaders raised in the early “revolutionary tribunals”—have distracted us from the steady if less immediately accessible increase in conflicts over the government’s economic policies through the latter part of 1951 and the growing opposition among sectors of the business community that fed the Amins’ campaign against the Wafd. Parts of the banking and exporting sectors in particular were up in arms about the disastrous effects of the government’s defensive interventions in a collapsing world cotton market. The pound suddenly began to drop faster than other currencies, exports failed to rise, the disturbances in the Canal Zone triggered an unprecedented flow of capital out of Egypt, and manufacturers faced at once sharply rising raw material prices and new taxes.^[23]

In the changed economic circumstances, the extent of government collusion with big investors like ‘Abbud and Yahya and the particular privileges these investors were thought to have, for instance, in escaping the costs associated with the government’s policies were evaluated differently. Certainly, some were being encouraged even more positively than before to seek such a position for themselves. Until now, though, we have glossed over crucial details of these elite conflicts in the rush to narrate (rather too cataclysmically) the events leading up to the army coup in July 1952 or have considered them only insofar as they figure in the successive and now widely assimilated indictments of (circa 1952–1954) the ancien régime and of (circa 1955–1961) Egyptian “monopolists.”

During the months of deepening crisis in late 1951, ‘Abbud pursued the unenviable goal of trying to prevent the British and American embassies from counseling either for an escalation of repression inside the Canal Zone or for a change of government inside Egypt. Throughout the fall he served as one of the main channels through which the Egyptian antagonists in effect tried to contain the conflict. He of course would attest to the “moderation” of the Sirag al-Din faction (and his own influence over Sirag al-Din) and its alleged capacity to coopt the “extremists,” while arguing that any other government in Egypt would in effect leave the British worse off. The Amins and others in the anti-Wafd camp, however, would portray Sirag al-Din as a power hungry, would-be demagogue who paid for the guerrillas that were terrorizing British personnel.

Once the Wafd government fell in January 1952, ‘Abbud and his allies organized in order to stave off—successfully, if temporarily—a challenge by rival investors for greater access to (or redistribution of) parts of this formidable “private” economic empire. There were heavy costs involved in what turns out to have been the last elite economic conflict of the liberal era. Egyptian investors played a central role in the rise and fall of Egypt’s three last and infamously short-lived governments. At the same time, the unfolding of these events strongly suggests that elites differed in their assessments of the nature, sources, extent and depth of the crisis triggered by the fighting in the Canal Zone and the end of the Korean War–driven cotton boom. Certainly, ‘Abbud acted as if he had more to fear from his class rivals than his class enemies.

Deconstructing the Discourse of Reform

A lopsided, bloody battle in Isma‘iliya between Egyptian police and British artillery led to a massive demonstration in Cairo the next morning, 26 January 1952 (“Black Saturday”); the demonstration turned into an uprising against the European presence in the city. Shops, showrooms, hotels, cinemas, bars and nightclubs were burned, leaving millions of pounds in damage, twenty-six Egyptians and foreigners dead and the Nahhas government dismissed from office in the fire’s wake. No wonder that labor-union militants, the Free Officers and other parts of the counter-establishment viewed the fire as an imperialist plot and the palace as now squarely in league with foreign powers. The imposition of martial law led to a new wave of arrests of the regime’s enemies; the Americans approved the shipment of riot-control gear (including armored cars and sub-machine guns) to the police and encouraged the new ‘Ali Mahir government in a strategy of purging communist leaders from the trade-union movement; and, most crucially, all anti-British activities in the Canal Zone were ended.

In the aftermath of the Cairo fire, royalists in the Misr group led the effort to shore up the monarchy. Elias Andraos, a Sudan-born investor whose rise from clerk at the Beida Dyers textile mill at Kafr al-Dawwar to managing director and a key decision maker had gained him a reputation as a financial genius, played a pivotal role. Andraos, who originally supported and profited from the Wafd’s return to power, was following the path carved by ‘Abbud himself between 1928 and 1935 by using the palace to assist his own lightning rise in the local political economy. He was appointed pasha, senator and Suez Canal Company director in 1950 as he prepared to move into the chemicals sector and expand his textile interests with a new project in the Sudan. Unsurprisingly, this aggressive press into the center of Egyptian business and political arenas was accompanied by the same kinds of contemptuous judgments that political enemies and business rivals in the 1930s offered about ‘Abbud.^[24]

In October 1951 Andraos was named “honorary economic adviser to the royal khassa” (that is, the king’s treasury), where he steered the palace’s last realignment, in alliance with the heads of the minority parties, the British embassy and ex-palace stalwarts like the Amins, whose newspaper empire, according to American embassy files, had originally been bankrolled by Faruq.^[25] Andraos shared the chore with the eminently more “clubbable” Misr Bank board chairman, ‘Afifi, who resigned his positions with the Misr group in December 1951 to became chief of the royal cabinet.^[26] Once again, therefore, ‘Afifi and, presumably, a pro-‘Afifi faction within the Misr group of firms were aligned against his long-time personal and business rival ‘Abbud, who was straining throughout the fall and winter of 1951–1952 to keep the Wafd in power.

Both the British and the Americans were naturally inclined at this juncture toward the elite opposition’s appeal to address Egypt’s “real” need for internal reform. The dilemma consisted in the utter lack of any practical political strategy for advancing this project in the face of the Wafd’s immensely popular gamble of confronting the (much-weakened) British imperial state. While the Amins would insist in the weeks before the fire that “the first steps” in getting rid of the Wafd had already been taken, aside from some desultory contacts with CIA officer Kermit (Kim) Roosevelt, they offered nothing more concrete than a campaign in the pages of Akhir Lahza accusing the Sirag al-Din family of selling cotton to Israel. And Ahmad Hushamza had no more practical plan to offer to the Americans than to wait for the Wafd to lose control of events—though he could hardly have known that the strategy would turn out to be the correct one.^[27]

When the venerable politician and Misr group director ‘Ali Mahir was named prime minister in January 1952, he showed himself willing to take the heat for the strong dose of austerity that bankers were demanding while trying to undo the damage of the Wafd government’s disastrous cotton price-support policy. He refused, however, to carry out a vendetta against the Wafd itself, in effect, double-crossing the ‘Amin-palace bloc that had put him in the prime minister’s seat, and these tireless if not very skillful cabinet makers returned to the shop.

In less than a month Mahir had been cast aside and, with the help of the British embassy, replaced with an obviously embittered and tragically shortsighted Hilali, who had finally broken with the Wafd in November 1951 over the treaty-abrogation issue. CIA operative Roosevelt appears to have been involved, at least on the periphery, with these maneuvers (Gordon 1992: 34, 162; Sayed-Ahmad 1989: 41–42, 48). More important, for the next three months, Hilali did exactly what his sundry backers had wanted: burying the treaty issue and launching a full-scale attack on the Sirag al-Din–‘Abbud party, which included the arrest of the Wafd’s secretary general, the dissolution of parliament (where Sirag al-Din had demonstrated his dominance) and an attack on ‘Abbud’s business empire.

U.S. Ambassador Caffery heralded Hilali as an honest patriot, a corruption buster and essentially Egypt’s last chance for reform, though a mere nine months earlier Hilali was leading the battle in parliament against “American imperialism” in the guise of the U.S. Point IV program.^[28] Caffery’s pragmatism is less interesting here than the unraveling of the main discursive thread in the American narrative about Egypt under the Wafd, which for one year posited reform as the real problem. Thus, in the first days of the new Hilali administration, one of Caffery’s key Egyptian contacts, Ahmad Hushamza, revealed that he would not be joining the government of his “close friend and confidant” both because he ostensibly objected to the “engineering” of Mahir’s dismissal by the Amin brothers and the palace, and, more importantly, because the government had zero public support. As Hushamza put it, in the eyes of most Egyptians, Hilali’s reform plank was simply a distraction from the real issue.^[29]

Hushamza was correct, of course. Relative to forcing Great Britain to end its military presence in the Canal Zone there was indeed little concern about this latest round between oligarchic factions that he had been dragged into and now appeared desperate to escape, though Hushamza’s depiction of the situation was more understated than that of some others. For example, in a broadside, the clandestine Free Officers condemned Hilali as the servant of “imperialists and Egyptian traitors” who had “forgotten that the source of the greatest corruption is imperialism,” and they branded his war against the Wafd as “a new coupd’état” (Gordon 1992: 51).

For broadly the same reasons, the Truman administration found that its own modest effort to build a coalition inside the Hilali government in support of a land-reform program faced resistance from some officials, though Hilali’s own position remains unclear. It should also be noted that American proposals for land reform in 1951–1952 centered on reclamation, the settling of landless peasants and the regulation of landlord-tenant relations.^[30] In fact, proposals along these lines began to proliferate in the months after the Cairo fire, promoted most strongly by those who did not want to see the Wafd back in power or the campaign revived against the British bases.

Again, the issue of land reform is often presented as something that was objectively necessary for industrial development, and the fact that Egyptian investors failed to pursue such a course is viewed as a sign of their incapacity to act in their own best interests at a critical juncture. The premise is, minimally, a contestable one. Many argued the opposite, for instance, pointing to the disruptions in production that would accompany the redrawing of property lines, and we know that this argument eventually won the backing of the military in 1952, even as they carried out the confiscation of royal properties and other massive holdings.

There were additional rationales for land reform. The most basic—social justice—was for obvious reasons the one least likely to win the backing of property owners. A second rationale was that land reform would preempt the potential organization of a communist movement in the countryside. Again, it is hardly surprising that many Egyptians would be left unpersuaded, at least in the short run.

A third rationale was implicitly derided in the observation by Ahmad Husyan quoted above. A reform agenda centering on land redistribution had little direct connection with the discontent and demands of largely urban-based constituencies who backed, or more properly propelled, the Wafd’s act of brinkmanship. Fourth was the possibility of building an alternative, relatively conservative, rural-based constituency as the base of support for a non-Wafd party or, more likely, an authoritarian (reform) regime. Though the military leaders would pursue this course, it hardly solved the Canal bases question.

For good reason, therefore, American policymakers themselves began to reconsider the relative weight of internal and external obstacles to stability in the spring of 1952. Caffery attempted to bring local representatives to the bargaining table, while Dean Acheson looked to Eden for new concessions to break the Anglo-Egyptian stalemate.

London conceded little, however, in part because with the Canal Zone calm, the Wafd out of power, and Hilali engaged in his vendetta against the Sirag al-Din–‘Abbud party, Churchill’s hard-line government concluded (not entirely unreasonably) that they had gained themselves some time and maneuvering room. Acheson and his staff pressed Eden more heavily in June, arguing that Hilali would eventually fall if the British continued to resist concessions. And though the Americans later wrote that they had also expected Hilali to hang on until October, he handed the king his resignation unexpectedly on 28 June.^[31]

‘Abbud and his “Ilk”

The most notorious tale of the regime’s last days is the rumored plot behind Hilali’s resignation—the truth so explosive, warned the Cairo correspondent of the Times, as to be “unpublishable.” The rumor mills were in truth running overtime during the last week in June, as stories started circulating about intense contacts between the king and Sirri Pasha, intrigues taking place behind Hilali’s back and the king under intense pressure to change the government. One incontrovertible fact broke the rhythm momentarily: Hilali’s unexpected resignation. The cause of his downfall followed quickly in his letter to the king, leaked by Hilali’s foreign minister among others: ‘Abbud had allegedly paid £E 1 million into one of the king’s Swiss bank accounts in order to bring Sirri back as prime minister.

Two names were most often linked with ‘Abbud’s in this venture. The first was Karim Thabit, an ex-journalist, adviser to a host of major firms and groups (including ICI and Beida Dyers), and the king’s personal friend, though he seems to have had little contact with Faruq at this juncture. The second was Andraos, the king’s financial adviser, but others would occasionally add and subtract names from this basic list of “intriguers.”^[32] Since Thabit was regularly excoriated by the pashas then and historians now as an unqualified, unwise and corrupting influence on Faruq (e.g., see Gordon’s (1992: 18) description of the “sycophants”) , it is worth noting that Caffery described him as “one of the keenest political minds in Egypt” and relied on Thabit extensively for his own views of Egyptian power politics. For aristocrats like Sirri and ‘Afifi, who resented and at times paid the price for Thabit’s influence inside the palace, it was naturally soothing to criticize his relative lack of social standing (i.e., he was born in Khartoum, he did not come from an established “Egyptian family”) and, of course, to condemn the zeal with which Thabit amassed his wealth.^[33]

The way the ‘Abbud-Thabit-Andraos bribery plot was fitted into various narratives tells us a great deal about the forces most intensely involved in the game for control of the Egyptian state and its policies on the eve of the coup, including the Americans, the British embassy and rival parts of the oligarchy. Needless to say, ‘Abbud, Thabit and Andraos all vehemently denounced the bribery rumor as an outrageous lie. What could not be denied, however, is their having worked in loose cooperation for the past two months to weaken Hilali and, at least in ‘Abbud’s case, return the Wafd to power. The British embassy and its intelligence arm tried during the next weeks to confirm details of the alleged bribery, but could not, and once the army took power three weeks later the evidence no longer mattered.

The British seized upon the bribery story for two reasons, and then clung to it for a third. First, they were heavily invested in Hilali and his reform project, as we have seen, and they considered his resignation a setback in their strategy vis-à-vis both the Egyptians and the Americans. They feared the return of the Wafd and wanted Hilali reinstated, and the ostensible outrageousness of the alleged action justified and provided ammunition for pressuring the king on Hilali’s behalf. A second reason for running with the story was so purely instrumental and logically convoluted that cynicism is the most reasonable interpretative strategy to employ in this case. Members of the Foreign Office saw the story as a “heaven sent opportunity” to force “Andraos and company” out of the king’s orbit and to leave him more firmly under the influence of Hilali’s main palace ally, ‘Afifi. Whitehall concluded that it was the king’s two disreputable advisers, Thabit and Andraos, who were preventing the Egyptian government from negotiating “realistically” with them.^[34]

Third, there were formidable obstacles in the way of reversing the course set in motion by Hilali’s resignation. As British officials admitted, his domestic support was now limited “practically to the Amin twins,” and though his vendetta against the Wafd was a policy the British state encouraged, its officials had a remarkable capacity to absolve themselves of its unintended consequences—namely, that it tended to mobilize those who were most threatened. Thus in targeting figures like Sirag al-Din and ‘Abbud, they concluded that Hilali had possibly been “tactless and ill-advised.” The bigger problem, however, is that the Foreign Office wanted the Americans to line up behind them in support of a joint intervention on behalf of Hilali and ‘Afifi against the “crooks,” yet Caffery and the State Department refused, arguing that the British were in fact the main cause of Hilali’s downfall.^[35]

Since the bribery story had only limited value for the Americans, they were eager to downplay its significance. At best, it reinforced the view that Hilali represented a reasonable (“moderate”) alternative to the Wafd and “vested interest[s]” such as those represented by the “venal trio” of ‘Abbud, Thabit and Andraos. Yet, it also clearly allowed the British to escape recognizing that Hilali’s (or any other non-Wafd led government’s) best chances remained in winning concessions in the deadlocked bases talks. Instead, Eden’s first, petulant response to these events was a vow to let Faruq and his new prime minister Sirri “stew.” He could contemplate this plan because, as his foreign-policy staff made clear, they saw no threat to Egyptian security and stability from this newest turn of events, at least in the short term.

In their view, the long-run threat of the Wafd remained the most serious problem, and the Foreign Office continued to hold up the bribery claim in order to deflect the Americans’ criticisms. Another threat was that the Americans would push harder for treaty concessions. The obsession with the Americans can be seen in the British embassy’s theory that Caffery himself was at least indirectly to blame for Hilali’s fall since his frequent and well-publicized contacts with ‘Abbud made it appear as if the Americans were leaning toward the Wafd!^[36]

The game was an immensely complicated one but also one that key players hardly viewed as deadlocked in early July 1952, which explains both the cautious optimism of the ‘Abbud–Sirag al-Din wing as well as the increasing frustration of the al-Akhbar circle, its British backers, the king and ‘Afifi, who was probably Faruq’s most influential adviser during the last month of rule. As various American and British officials acknowledged, the probability was high that a new round of elections would be held sometime in the fall, and many Egyptians viewed elections as the most likely route to resolving the national question.

All the relevant forces in the Egyptian scene had come to recognize the crucial importance of the United States in the outcome. There is no clearer evidence than ‘Abbud’s and Sirag al-Din’s appeal to the Truman administration to back the Wafd’s return to power. In exchange, they had proposed a “detailed secret agreement with the United States.” The RCC would try to do the same six months later.^[37] A U.S.-Wafd alliance was one of the chief fears of all those who, for various reasons, coalesced around Hilali’s alternative reform project, the British state foremost among them.

As I have noted, the fear was palpable in the rather paranoid complaints about Caffery’s meeting too frequently with ‘Abbud or, of course, the idea that ‘Abbud could simply buy the premiership for his ally Sirri. But the fear is equally palpable in the energy spent trying to sell the “venal trio” scenario to the Americans. Egypt’s most famous journalist, Muhammad Haykal, then in the employ of the Amins, turned over to the Americans dubious proof of the conspiracy against Hilali—a private letter forwarded by the premier to the king.^[38]

Perhaps the best evidence for this growing fear among elites that a new round of elections was in the offing and, thus, that a renewed mandate for the ‘Abbud–Sirag al-Din party was probable is the sudden appearance of and frequent references specifically to land reform in records of conversations, other archival sources and the Egyptian press, especially by anti-Wafd elites in the late spring and early summer of 1952. The logic is simple, though this particular path to building a counter-electoral coalition (or, alternatively, to securing a degree of popular support for authoritarian rule) was fraught with its own dangers and uncertainties: could Hilali or some alternative set of elites run successfully against the Wafd on the basis of land-reform program? In any case, the situation in Egypt in mid-1952 was far from deadlocked—this was the real problem.

At the same time, the situation was hardly one of calm or of business as usual. No action is more symbolic of the errors in judgment during this prolonged crisis than the disastrous decision by the monarchy in mid-July to try to reassert its authority within the army, the step that prompted dissident officers to plan and mount a coup d’état on 23 July 1952 in order to protect themselves against arrest (Gordon 1992). Certainly, the size and scope of the January uprising had sobered many. But from mid-February until the military conspirators carried out their preemptive coup on 23 July, strikes, demonstrations and other usual indicators of political unrest had dropped effectively to zero.^[39] Repression had proved effective.

On 24 June 1952, in a conversation with U.S. secretary of state Acheson, Britain’s ambassador to Egypt, Ralph Stevenson, guessed that Hilali would hold on a few more months at best before a new caretaker government was brought in to oversee the next elections. Acheson naturally pressed the ambassador for his view of the next six months and, particularly, whether he anticipated a decline in stability. But Stevenson judged the situation positively, in part because of improved internal security and in part because, before elections, he expected the government to concentrate on the issue of “redistribution of land.”^[40]

Two weeks (and two governments) later, and literally on the eve of the coup, the king’s top official and ex-Misr group head, ‘Afifi Pasha, was even more upbeat than Stevenson. Specifically, ‘Afifi had told another top British embassy official that his optimism was higher than at any time in the previous six months for two reasons. First, the attempt by ‘Abbud and his allies to hijack the state had gone awry. Second, and what must in retrospect be the single most ironic commentary on the future of the ancien régime by one of its chief pillars, ‘Afifi looked forward to a swift resolution of the “army problem.”^[41]

There were at least two broad and, in the eyes of the key players, viable solutions to the crisis. One of course was familiar from the past—namely, extending the boundaries of sovereign decision-making authority in arenas still contested by the ex-colonial power. The second solution entailed some kind of redistributive project in the countryside. The Wafd was probably in the stronger position. Certainly, those like the Amins or Thabit, who tried to imagine Faruq as head of a reformist-authoritarian regime, were no doubt discounting the future somewhat more heavily in July 1952 than was the Sirag al-Din–‘Abbud party, who had placed Sirri back in power and had begun setting the stage for a new round of elections in the fall before leaving for their regular summer vacations in Europe.

The Americans enjoyed the luxury of hedging their bets. As I have argued, Caffery’s superiors were moving the machinery of state in position to pressure London for concessions on the bases or Sudan or both. At the same time, by the spring of 1952, two land-reclamation experts had been seconded to Egypt under the auspices of the Technical Cooperation Administration (Point IV) and were working with a circle of policymakers and Hilali allies in advancing a land-reform project. The same mission was augmented in mid-August to facilitate the implementation of the army’s highly publicized land-reform initiative, launched within weeks of the coup, though ambassador Caffery insisted that the American role was not to be publicized.^[42]

The general logic of these two, competing approaches to resolving the Egyptian crisis was confirmed by events subsequent to the coup. With critical American support, the new revolutionary regime moved in both these directions simultaneously (Binder 1978; Waterbury 1983).

Before the Fall

Most discussions of business and politics in the post-1952 period (e.g., Abdel-Malek 1968, Waterbury 1983, Zaalouk 1989, Tignor 1992) start with the assumption that the turn to “Arab socialism” was neither foreseen nor pursued by the military officers who took power in July. O’Brien first developed this argument systematically in The Revolution in Egypt’s Economic System(1966). His formulation of the Revolution’s various phases in terms of the regime’s general policy toward capital and, in particular, its first so-called free-enterprise phase between 1952 and 1956 underpins virtually all subsequent accounts until now. Thus, from varying ideological positions, both Beinin (1990: 87) and Tignor (1992: 274) emphasize the wide gulf dividing pre– and post–Suez War policies toward Egyptian and foreign investors. But the imperatives that once made it crucial to label Egypt’s political economy as either capitalist or socialist have lost their force, and the terms now seem both somewhat crude and quaint. What others have insisted was a policy of encouraging private enterprise is analyzed here as a strategy of opposing the local business oligarchy and its privileged position within the political economy.

The analysis builds on a point that Waterbury (1983) usefully counterpoises to the more structurally oriented and determinist conceptions of the military regime’s taking power in order to fulfill the bourgeois project: namely, the regime’s profound suspicions of, and antipathy toward, Egypt’s leading capitalists. I argue that the key military leaders had an explicit, broad ideological orientation toward capital, articulated in terms of antimonopolism, which shaped the regime’s policies, while the relatively feeble or ineffective regulatory capacities of the state agencies that the army officers inherited further encouraged the early (i.e., pre–Suez War) shift toward dismantling or taking over rather than regulating existing capitalist institutions and particularly those at the center of the business oligarchy, beginning with the ‘Abbud group.^[43]

The “Blessed Movement” against the Monopolists

The idea that the army officers took power without clear or specific designs for economic reform and, crucially, “without an economic ideology” has been repeated so often over the years that it has ceased even to require a defense (e.g., Lacouture and Lacouture 1958; O’Brien 1966). Yet this kind of claim rests on an understanding of ideology as being more akin to “lofty theory” or a fully worked out philosophical system than to the kind of “common sense” view(s) of the world held by most men and women. (Augelli and Murphy 1988: 13–30). The ideologies of Nasser and his comrades were no more or less coherent, organized and contradictory than the “ideologies” of Eden, Acheson, Eisenhower and their representatives in Cairo, Stevenson and Caffery, among other key actors at this juncture.

The officers had collectively defined their project in terms of six underlying “principles,” widely believed to have been written by marxist officers Ahmad Hamrush and Khalid Muhiy al-Din, including the commonly cited one about “ending feudalism.” Though often disparaged, this formulation does not seem particularly vague when compared with contemporary discourses about strengthening the market, encouraging democracy or respecting difference. And, as is readily recognized, once in power the officers had little difficulty in mobilizing the necessary intellectual and technical resources for developing specific policies that reflected this principle, as attested to by the land-reform program developed by Egyptian civilians (with the input of Italian advisers and American technicians) and put into law six weeks after the coup. The other principles of the Revolution were no less important in shaping the military’s approach to the political economy.

Probably the least discussed part of the officers’ project was the commitment to “ending the monopoly system,” a system which, as we have seen, was designed, built and nurtured by British colonial state officials, foreign and local investors and Egyptian national political elites. By 1952 large-scale production and distribution were no longer sectors monopolized by foreign capital and nonnationals; instead, control of these monopoly and oligopoly sectors was shifting to coalitions of Egyptian investors. The “monopoly system” was in essence a synonym for Egypt’s business groups and their cross-sectoral holdings in textiles, shipping, transportation, chemicals, services, food processing, etc. Even more concretely, the essence of that system seemed to be represented by the country’s single most powerful capitalist at mid-century, ‘Abbud.

Opposition to monopoly was as much or more a part of the contemporary landscape as land reform and was made explicit in the work of Rashid al-Barrawi, the radical Egyptian economist who rose to prominence as a publicist for the Revolution on the left and adviser to the new regime on economic issues. According to Gordon (1992: 167), U.S. Ambassador Caffery blocked a cabinet post for Barrawi in the first post-coup government. The Americans then tried to coopt the increasingly influential left-technocrat, offering to bring him to the United States for an educational-study tour in 1954.^[44] Together with a handful of other intellectuals on the left, Barrawi met regularly with the junta and was important in shaping its populist discourse and programs. Between 1953 and 1958, he directed the state’s industrial-development bank and served with the marxist lawyer Ahmad Fu’ad, Nasser’s closest economic adviser in the 1950s (Lacouture and Lacouture 1958), as the left wing of the government’s advisory council on industrial policy.

Since the mid-1940s, Barrawi had been writing in favor of land reform and a government-directed industrialization drive, which was to include nationalization of basic industries in line with welfare-state development models then being adopted in Europe (Rashid al-Barrawi and Muhammad Maza ‘Ulaysh 1945). In his 1952 “instant” account of the military coup, Barrawi had focused on the inordinate power exerted by “monopolists” like ‘Abbud and the Misr group, both as an indictment of the old regime’s reactionary social-political order and as part of an argument for the inevitability of the kind of progressive economic programs to be undertaken by the revolutionary leadership (Rashid al-Barrawi 1952; Meijer 1990).

The antimonopolist component in the new leaders’ world views was evident to observers at the time in the form of the deep suspicions that were openly harbored toward ‘Abbud and every other business oligarch, from Farghali to Yahya, even as an uneasy and relatively short-lived accommodation was negotiated with them. Yet, rather than reconciling themselves to business privilege, in a way that might have produced alternative discourses and practices (e.g., the inevitability or necessity of concentration; self-regulation by business interests; societal corporatism), the revolutionary leaders made antimonopolism the explicit rationale for successive encroachments by state agents during 1954–1955 into the factories and boardrooms of the business oligarchs.

‘Abbud’s relations with the new leaders and the institutions they sought to build illustrate the complex politics behind the regime’s encounter with the country’s leading capitalists. ‘Abbud chose prudently to remain abroad for most of July through September. From Paris, where he was attending the September meeting of the Suez Canal Company board, he praised the government’s brutal handling of the infamous strike at the Misr group’s textile mills in Kafr al-Dawwar in August, applauding Nagib as head of a movement that “all Egyptians” had welcomed. ‘Abbud assured reporters that life in Egypt was “back to normal.” Four days later an extraordinary military tribunal executed two of the strikers by hanging (al-Akhbar 3 September 1952; Beinin and Lockman 1987: 421–426; Gordon 1992: 62–63, 94–95; Botman 1988: 125–131).

Once back in Cairo, ‘Abbud reached instinctively to various parts of his decades-old repertoire in order to recover from the setback of the coup and the expropriation of his 5,000-faddan estate. For instance, by late December 1952, Akhbar al-Yawm had been enlisted in a newpublic-relations effort. The paper reported that the exiled King Faruq had once allegedly offered £E 1,000 to his royal guard to kill ‘Abbud! As ‘Abbud solemnly declared, “Faruq loathed every person who worked in his country.” His new investments in “human capital” followed along these same lines, to judge from the emergence in the post-1952 period of new managers and directors in various of ‘Abbud’s ventures, such as Isma‘il Sabri Baligh, the brother of a trusted, second-rank Free Officer, ‘Ali Sabri.^[45]

The basis of the new bargain between ‘Abbud and the country’s military leaders was, nonetheless, his institutional position as the country’s leading owner-investor. The output of his nitrate factory was a vital raw material for ammunition as well as for fertilizers, and the military turned to him for help in developing a domestic weapons industry. Unfortunately, little is known about the origins and operations of the military sectors of the economy. Yet proregime papers began to promote ‘Abbud’s contribution to the country’s renaissance, even as his allies in the Wafd were dragged off to jail. And, by the winter of 1952, U.S. Ambassador Caffery was describing relations between the businessman and the junta as “cooperative” though not “cordial” since the officers obviously needed capital and at the same time distrusted capitalists.^[46] Little that the officers and their backers would do in the following months can be interpreted as allaying the equally deep and understandable suspicions of the oligarchs themselves.

The attack on the party system in 1952–1953 was a serious blow to ‘Abbud, but the effort to contain his influence encompassed nonparty arenas as well. The best example is the creation of the various public economic authorities and quasi-planning agencies in 1952–1953, notably the Permanent Council for Development of National Production (hereafter the NPC). Here, as in other policymaking domains, investors like ‘Imari, the regime’s new minister of finance, battled with less reliably procapitalist counsel (e.g., Barrawi, Magdi Hasanhamza, Ahmad Fu’ad, Khalid Muhiy al-Din). If anything, analysts have tended to underrepresent the force of etatist currents in these unfolding institutional arrangements.^[47] But, just as crucially, ‘Abbud and other leading business oligarchs had been kept out of them.

The representation of local capital in these new institutions tells us something about the Revolution’s early impact on the business community, while at the same time reminding us of the limits that the Free Officers quickly ran up against after seizing control of the state. (See Table 5.) Given the highly concentrated, overlapping structure of ownership and control across key industries, it was virtually impossible to tap Egyptians who were not linked in one way or another to the ‘Abbud, Yahya, Salvagos, etc., groups. At the same time, the opportunity appeared irresistible to an ambitious set of second-tier investors (or would be investors) seeking to advance their own fortunes in time-honored fashion: through preferential access to decision makers and a relatively more rather than less intense courting of foreign backers.

‘Imari played the pivotal role in shaping what might be thought of as the Kom Ombo wing of the RCC, or so it seemed to American observers such as Caffery, who described him as a key figure in the RCC’s ten-person “inner cabinet.”^[48] ‘Imari’s own protégé at the Finance Ministry, ‘Ali al-Giritli, was appointed to the NPC. Other investors whose political fortunes were on the rise included Hushamza Fahmi, chair of the NPC; Yahya al-‘Alayli, the managing director of the Kom Ombo Company and member of the land-reform committee; Sayyid Mar‘i and his family, another key businessman on the land-reform committee drawn from the board of directors of the Kom Ombo Company; and the Sarufim family, who, like ‘Imari, were identified with the Anderson Clayton–owned oil mills and cotton-exporting complex in Minya and Alexandria.

As we have seen, many of these investors had actively opposed the Wafd-oligarch alliance and remained outspokenly critical of ‘Abbud and his methods, though their support of this new, foreign-backed authoritarian turn was almost identical to the course ‘Abbud had pursued so successfully in the 1930s.^[49] The most successful Egyptian capitalists of the interwar years had now become an entrenched set of interests standing in the way of this new cohort, much in the way that Suarès, Cattaoui and other minority investors must have been viewed three and four decades earlier. At the same time, however, there are no credible grounds for describing these key supporters of the ‘Ali Mahir and Nagib governments (1952–1954) as the core, finally, of an industrial bourgeoisie. Certainly, many of them had opposed land reform (or at least the confiscation of their own estates), and, under their influence, the NPC (and the government’s investment policies generally) were still weighted toward support of agricultural production.

Unlike the situation in any other period in the twentieth century, though, these new and by all accounts politically ambitious investors had to contend with a regime in which local capitalists’ prerogatives, preferences and property rights were openly challenged for the first time, not least via the expropriation of their estates. As early as 1953 individual members of the RCC began to press for “socialization of portions of the economy.” ‘Imari was described as eager to counter such pressure and reassure the business community. Yet, ‘Imari was distrusted by currents within the junta who were keeping “a very close check on his activities,” and, as I will discuss below, he and his allies fell victim to the regime’s antimonopolist currents by 1954–1955.^[50] In similar fashion, Nasser approved the creation of the cabinet-level national planning committee in 1955, which was a step intended to weaken still further the influence of capitalists in the fashioning of industrial policy. By 1956, and, importantly, prior to the sequestration of French- and British-owned enterprise, Nasser appointed ‘Aziz Sidqi, a main architect of etatism in Egypt, to head the newly created Ministry of Industry.^[51]

The influence of ‘Imari and allied investors in various policy arenas (e.g., the regime’s public investment priorities and their financing, the expanded U.S. contribution in land-reform and industrial-development policies, the revision of the mining law) was a bargain whose terms the RCC probably had relatively little capacity to shape, at least initially, though the military would gradually adopt a more openly clientelist policy toward capitalist factions. At the same time, the Americans seemed no less wary of the oligarchy than Egypt’s new rulers, and they were no less implicated, finally, in promoting an alternative set of “weaker” Egyptian capitalist elites. Specifically, the U.S. State Department, like the British Foreign Office in the 1930s (see Chapter 3) launched a campaign of its own against ‘Abbud.

Within months of the coup, representatives of W. R. Grace and Company informed the Bureau of Near Eastern Affairs of their interest in going forward with plans to build a paper mill in Egypt. ‘Abbud was undoubtedly pressing his new U.S. partners on supplying the hard currency required, hoping among other things to demonstrate his continuing commitment and indispensability to Egypt’s industrial development. The State Department was equally interested in assisting the industry-building efforts of Egypt’s new military regime. It is especially noteworthy, therefore, that Assistant Secretary Henry Byroade and his advisers in this case pressed the U.S. multinational to abandon ‘Abbud and find an alternate set of local investors before undertaking the project.^[52]

Pipe Dreams: The Mirage of Foreign Investment in Egyptian ISI

The Revolution’s course was relatively open-ended, but we have tended to confuse the exigencies of regime consolidation and the extremely limited capacities of the junta with the officers’ alleged ideological incoherence (or, alternatively, their pragmatism). In the case of the Aswan electrification project (Chapter 5), vast stretches of the policymaking terrain were effectively seized by, or conceded to, pre-existing elite networks who pursued their own agendas.

One of the more controversial and surprising policy initiatives of the Revolution, given the thrust of nationalist discourses before and since, was the reversal of many of the Egyptianization policies of the late 1940s—laws governing foreign investment, oil prospecting and company formation—for the purpose of attracting new flows of foreign capital to the country (O’Brien 1966: 71–72; Ministry of Commerce and Industry 1955: 144–165; Waterbury 1983: 60–63, 123–134). Authorship of this package rests chiefly with the Fu’ad I Society for Political Economy, Legislation and Statistics (roughly, Egypt’s first economic-policy think tank), where much of it had been outlined as early as 1950–1951. It was implemented by Hilmi Bahgat Badawi, the society’s assistant secretary general. Badawi, who became the first minister of commerce and industry after the coup, was one of the key voices in the summer 1951 debate over Point IV aid.^[53]

Though virtually unrecognized until now, Point IV was the institution through which the Truman and Eisenhower administrations paid for the American business leaders, economists, engineers and other technical consultants who helped design and promote the Revolution’s early industrial-development initiatives, which were associated, perhaps too exclusively, with Nasser, the military regime and technocrats in the NPC.^[54] The NPC was itself a reconfiguration of the business-dominated advisory council on economic policy created by the Wafd. More important, during the summer and fall of 1951, the Wafd government and the Fu’ad I Society were negotiating with the Americans in Cairo to cooperate in a comprehensive development plan for the political economy.

Within weeks of the coup, Ambassador Caffery and the Point IV office were pressing the new premier, Mahir (no doubt in conjunction with Egyptian currents), to revive the Wafd–Fu’ad I project in the form of a “national planning body” to survey Egypt’s economic potential and establish priorities for investment.^[55] Mahir quickly approved the plan, but it was his successor, Nagib, who would follow through with the initiative. Months before the NPC held its first meeting, the State Department contracted with the Cambridge, Massachusetts, consulting firm A. D. Little for an initial $30 thousand survey of the economy; this survey formed the basis for the subsequent, four-year-long $300–500 thousand A. D. Little mission to Egypt. And A. D. Little selected a high-profile U.S. executive to lead the mission and advise Nagib on industrial policy.^[56] The line of continuity between the Wafd andpost-Wafd era is clear in this case, though the Americans helped to ensure it.

Thomas Cabot, the former president of United Fruit who had helped organize the State Department’s foreign-aid program, visited Egypt in the winter of 1952–1953, and his February 1953 report to the incoming Eisenhower administration urged support for industrial development in Egypt while laying out a virtual blueprint of subsequent government reforms in company law, mining law, taxes, tariffs and profits remittance.^[57] Six months later, the NPC published its four-year public and private investment program, which was derived from the proposals of the Cambridge consulting firm for extending Egypt’s road network and investing in tire assembly, food-processing industries, oil production, tourism, etc.^[58] By 1954, the Americans had committed more than $40 million for an Egyptian development strategy that resembled other U.S.-backed ISI programs then being undertaken throughout the developing world (Nolt and Maxfield 1990; “The Future of Point Four,” New York Times Magazine 26 September 1954).

Though Nagib and the RCC faced growing criticism for its increasingly open alliance with the Americans, Nasser himself defended the regime, for instance, before a hostile group of students in Alexandria protesting the Point IV program:

We cannot live in isolation, refusing any helping hand, because we think it has ulterior motives behind it. It may have happened before, but it was we who let it, because we were not alert .…

We should get rid of this complex and with it the policy of isolation and fear. We should accept any kind of assistance whether it be in the form of Point IV or any other; and we should proceed with all the projects that we have started, condemning once and for all this erroneous complex.^[59]

The early emphasis on foreign capital and expertise, together with the growing prominence of aid as a key foreign-policy problem in 1954–1956, reflected some of the same underlying factors—the lack of hard-currency resources and administrative capacity—that hampered the Wafd’s even more modest development efforts.^[60] What is perhaps more remarkable about investment policy after 1952 is that the A. D. Little consultants and their clients may have actually believed the forecasts of £E 7 million annually in new direct foreign investment flowing to Egypt as a result of improvements in the ever elusive “investment climate” or of doubling employment in manufacturing industry between 1955 and 1965.^[61]

Internal White House assessments diverged sharply from those of A. D. Little, Caffery and others of the Revolution’s most avid boosters inside the American Embassy: “It is doubtful that the removal of all administrative impediments would produce a sizable inflow of foreign capital. This is because at the present time there appears to be a relatively small number of good investment opportunities in Egypt.”^[62]

This more pessimistic line of analysis can be traced back as early as the mid-1930s, in the assessments by senior executives of ICI, who, as discussed in Chapter 3, were at the time part of the pioneering wave of the world’s leading chemical producers investing in overseas manufacturing.^[63] And while ICI found long-term investment prospects uninviting, those multinational owners and managers who did risk expansion into niches of the Egyptian market in the 1930s and 1940s, such as Anderson Clayton, obviously did not find so-called administrative impediments particularly onerous or burdensome.

The ultimate targets of the new, liberal foreign-investment laws were international oil companies. In 1949, the two multinational subsidiaries that controlled 100 percent of domestic oil production and roughly 75 percent of all sales of refined products in Egypt had stopped all exploration operations, using as a well-publicized excuse the Nuqrashi government’s Egyptianization campaign. Yet, it is clear from the companies’ correspondence with American officials that the core of the dispute was the pre-1952 Egyptian state’s audacious attempt (in the companies’ view) to set the selling price for indigenous crude and to increase royalty rates for new production.

The new Nagib government granted additional generous concessions to U.S. independents such as Continental Oil (Conoco) and Cities Service in return for prospecting new fields, presumably with the view of pressuring the established producers, Anglo-Egyptian Oil (Royal Dutch Shell) and Mobil, but the agreement eventually reached with the larger firms in 1954 left both the old rate and the royalty structure intact.^[64] This was arguably one of the most impressive displays of bargaining power by foreign firms in decades and ultimately was the source of most of the new private foreign capital invested in Egypt between 1953 and 1961. The oil was obviously vital to the new regime. Local investors gained some of the rents from trading the concession rights. But the U.S. embassy’s attempt to hail the employment-creating benefits of this new investment activity (the oil industry is highly capital-intensive) rings especially hollow.

Adoption of a more systematic ISI investment strategy after 1952 may have been overdetermined, but it is important to recognize that American expertise and financial assistance were weighing in on one side of a debate. Though we have tended to see post-1952 industrial policy as a seamless continuation and extension of pre-1952 tendencies, and thus a policy undertaken on the behalf of national capital, it turns out that segments of the business community had begun to question the logic of ISI at this precise moment. In the case of the textile industry, the country’s biggest industrial sector and employer, I found evidence of sharp disagreements over the best way to secure the industry’s future prosperity, including calls for a more export-oriented industrial policy. As chairman of the sugar industry, ‘Abbud supported the argument for deregulating prices and removing export controls. And though it is generally unrecognized, in late 1951 the Federation of Industries had come out in favor of a new, proexport regime.^[65]

In a revealing interview with the A. D. Little consultants in early 1953, Robert Gasche, the managing director of Filature Nationaled’Egypte and the son of the person who had been the country’s leading textile man for a generation, insisted that the future of the industry hinged on opening up new export markets. At the same time he vehemently rejected the argument that his spinning and weaving complex or the industry as a whole had been hurt by the exclusive use of Egyptian long and extra-long staple cotton as a raw material, marshaling figures to show why imports of so-called low-quality cottons would cost too much!^[66] Instead, he claimed that the single factor most responsible for increasing the costs of production was the existing labor regime and, in particular, the obstacles that the government had erected to reducing employment levels at the mills.^[67]

The Expansion of the Public Sector

Conservative economists of the era, such as Raymond Mikesell, attacked the precise kinds of development policies being promoted by U.S. agencies in Cairo and elsewhere for departing from cherished free-trade principles, encouraging “state ownership and control” and “their bias toward planning and against free enterprise.”^[68] If, indeed, preferred American designs for developing countries implied new forms of state intervention (“ownership and control”) in Egypt, and this priority coincided with that of would-be Egyptian planners (e.g., ‘Aziz Sidqi) and others who constituted the emerging antimonopolist current within the new ruling group, the business oligarchs were just as clearly opposed to the extension of a direct state role in the ownership and operation of their private industrial sinecures. Thus, as O’Brien notes, state agents involved themselves in the finance and management of these projects “[d]espite opposition from the Federation of Egyptian Industries” (1966: 84). Waterbury instead argues that public ownership was a belated response to longstanding “private sector appeals for greater state sponsorship” of industrial development (1983: 61).

Records from the time suggest that the specific distribution of local private and public investment shares in various industrial sectors after 1952 was the outcome of an ongoing contest, along the lines of the electric-power sector discussed in Chapter 5. Certainly, some investors actively resisted attempts by government agencies to claim an equity interest in new import-substitution enterprises. For instance, Sayyid Mar‘i and local partners in the National Paper Company apparently had to divert the plans of Free Officer Magdi Hasanhamza to build and run the proposed new paper mill as a state-owned enterprise.^[69]

This tendency grew more pronounced over time. The local partners in a much-touted, 1954 automobile tire–making venture (a project originally proposed by A. D. Little) resisted pressures from public authorities to make the state a partner in the factory.^[70] Yet in another case, despite the relatively small amount of capital involved (£E 200 thousand), the state emerged as the largest shareholder in the new Edfina food-processing company, registered officially in early 1956.^[71] And though it is argued that the impetus for public ownership, at least until the watershed expropriations of British and French properties in 1956–1957, was a response to private sector failure, ‘Abbud’s proposal to take an equity share in the state’s expanded petroleum-refining capacity was firmly rebuffed by the junta (Akhbar al-Yawm 11 April 1953).

The Revolution provided an expanded arena for etatist currents that had emerged after World War II, and the results were quickly apparent in various sectors, from fertilizers, construction, heavy industry and petroleum to the private press. The railways had of course never been privatized and were the real core of Egypt’s contemporary state-owned enterprise sector. The decision to expand the capacity of the government petroleum refinery, another key party of the contemporary landscape, was taken late in the 1940s, and carried out with the help of U.S. firms; this project was endorsed and extended by the military regime. The model of an independent hydropower commission devised in the early postwar years was adopted for overseeing the construction of the new government-owned power stations at the old and (proposed) new Aswan dams (Ayubi 1980: 218–220; Issawi 1963: 54; Waterbury 1992).

The new regime showed no particular inclination to divest itself of the diverse industrial portfolio gained as a result of the expropriation of the property of the king and his family in 1952, along with the property of emerging enemies of the state, such as the Abu al-Faths, investors whose properties were confiscated in 1954 following the March Crisis. Thus, the Nagib and Nasser governments emerged as probably the single largest domestic shareholder in the National Bottling Company, which produced and distributed Pepsi Cola, and a major shareholder in the Empain’s old power-supply company.^[72] Yet since capitalists like ‘Abbud had opposed the extension of state ownership in sectors like power and chemicals, precisely because they envisioned them as new and lucrative investment sites, it seems safe to assume that the oligarchs viewed the increasing support for public or mixed ownership of new industries inside the regime, correctly, as the most ominous of the threats directed against them.

Though analysts have described the new regime’s industrial policy as a simple extension of the previous, private-enterprise-oriented economy, with the most unique element being the numerous new incentives designed “to encourage domestic capital investment,” this generalization is misleading (Issawi 1963: 52; Dekmejian 1971: 122–123; Zaalouk 1989: 24–27). So, too, are the various explanations for the ostensible lack of positive response by Egypt’s biggest investors. The problem lies in the failure to see how for over seventy years virtually all domestic industrial investments had rested on privileged access to public resources, subsidies and other incentives. Once we factor in the increasingly restrictive regulatory environment, which was what public ownership ultimately meant, the government’s terms after 1952 are better understood as disincentives to cooperate, and we can see how coercion came to play the dominant role in the regime’s unfolding relations with capitalists like ‘Abbud.

The End of the Business Oligarchy

In a series of bold and unprecedented actions between 1954 and 1956, Nasser and his comrades turned on its head the seventy-year-long regime that had governed capital in Egypt and brought to an end the era in which investors governed the economy. The military rulers were explicit about this project, conceived of terms of ridding Egypt of “monopolistic capitalism” and elevated as a chief objective of the Revolution by 1955. Nasser’s allies in the expanding American community in Cairo, top-heavy with businessmen, bankers, aid specialists and spies, generally gave this project their continued support.

The stages of this project are easily discerned, beginning with the March Crisis of 1954, when Nasser triumphed over Nagib and the Nasser-dominated RCC crushed the movement to return the country to parliamentary rule.^[73] Realistically or not, late in March, the Wafd’s cadres were anticipating Sirag al-Din’s triumphant return as prime minister and “man of the year.”^[74] Days later, the American embassy weighed in on the side of police-organized crowds and regime-sanctioned strikers chanting, “No political parties and no democracy,” “Long live the Revolution.” For instance, on March 30, Caffery stressed the Peronist “undertones” in Nasser’s strategy, noting how “[o]rganized labor has been deliberately and effectively used for political purposes on nation-wide scale for first time in Egyptian history and must henceforth be expected to make its voice increasingly heard.” The ambassador concluded “that the results from our point of view can be called satisfactory.”^[75]

Investors who sided openly with Nagib, including the staunchly pro-American finance minister, ‘Imari, were among the first to pay the price for opposing the consolidation of a “military dictatorship” (Caffery’s term). ‘Imari and other technocrats-turned-businessmen who had joined the regime in 1952, such as ‘Ali al-Giritli, were forced from office. U.S. embassy observers correctly gauged the broader implications of the purge, arguing that it was the effect of Nasser’s turn to labor leaders at a critical point and marked, minimally, a shift in the regime’s social coalition. ‘Imari’s brand of fiscal conservatism was being sacrificed.^[76] More ominously, the owners of al-Misri and prominent Wafd party funders, the Abu al-Fath brothers, were tried and convicted for treason, and lost their printing press, while a score of ancien régime party elites were stripped of all political rights.^[77] In the following months, the Americans rewarded the Nasser regime with a new, $40 million aid package as the RCC went on to sign the Canal Base agreement with Great Britain.

The second stage in the project began in early 1955, coinciding with the military leaders’ increasing preoccupation with economic development issues such as the Aswan Dam. This stage involved the expansion of state authority to the remaining, non-party-based institutions from which business oligarchs still acted to shape basic contours of the political economy. As the newly appointed minister of state for production affairs, Hassan Ibrahim, a member of the RCC, took over supervision of the NPC from its nominal head, businessman Hushamza Fahmi, and Sidqi Sulayman, one of the original Free Officers, was named as its replacement secretary general.^[78] Along these same lines, the RCC engineered its purge at the Ministry of Commerce (businessman Hassan Mar‘i resigned) and its landmark corporatist reorganization of the Chambers of Commerce, reserving for itself the right to appoint one-half their directors and then further centralizing control through the creation of a new umbrella confederation (Bianchi 1989: 165–166, 168–169). “Reform” of the old Federation of Industries soon followed.

More crucially, though, the regime struck at the heart of the business oligarchy and a key institution of Egyptian capitalism—namely, the pattern of centrally controlled, cross-sectoral holdings and interlocking directorates that comprised the country’s various business groups. By amending the basic company law in 1955, the regime limited the numbers of firms for which individuals could serve as directors (six) or managing directors (two); at the same time it forced company directors to retire after reaching the age of sixty. The decrees affected some 200 businessmen from families who had steered the economy for over two generations—including Mahmud Shukri, Jules Klat, Atta ‘Afifi, Hushamza Sirri, Alexandre Benaki, Wahib Duss, Aslan Cattaoui, Akhnoukh Fanous, Albert Cicurel, Ahmad Rushdi, Rene Ismalum and Joseph Kfoury.^[79] O’Brien claimed that this measure was designed to strengthen the rights of shareholders, repeating the old canard that company directors (and interlocking directorates) played no useful role in company policymaking (1966: 73–74). But, as the list above attests, those affected were pioneering investors and dominant figures in the business community.

The regime went on to engineer the retirement of the leading lights at the pinnacle of local finance, including Shamsi, the long-time director of the National Bank of Egypt; ‘Imari, who had only recently been named managing director of Bank Misr; the Misr group’s chairman, ‘Abd al-Maksud Ahmad; and its largest shareholder, ‘Abbud.^[80] Though it is generally not discussed in the standard economic histories, both firms were declared public utilities in the spring of 1955. Other firms in the finance sector reported intense pressure to accept government-sanctioned appointees under threat of being declared public utilities as well. The new minister of finance and one of the architects of the emerging etatist political economy, ‘Abd al-Munim al-Qaysuni, presided over this partial reconfiguration (“deprivatization”) of the finance sector, which was driven at least in part by concern for mobilizing the enormous resources necessary for the high dam project.^[81]

Nasser provided a blunter defense of these interventions, according to internal U.S. embassy documents, having reminded Ambassador Byroade that one of the objectives of the Revolution was to rid Egypt of “monopolistic capitalism” and the “big capitalists” whom the regime had lumped together with its other foes in the March Crisis.^[82] At the same time, a more explicitly populist Nasser brought the same theme to the fore in his public appearances, including a well-publicized April 1955 address to military officers, where he stressed the government’s objective of ending “monopoly and capitalist dominance of government.” Importantly, and again according to American reports, Nasser advocated nationalization of the country’s big industries.^[83] O’Brien’s (1966: 68–69) discussion of widespread support for the government’s policies from the Chambers of Commerce, and the chairmen of Bank Misr and the National Bank of Egypt must be evaluated in light of the direct interventions by the regime at this precise moment, U.S. accounts speak in the same period of growing unease among big investors.

The third phase or component of the renewed campaign against the oligarchs, therefore, is marked by Nasser’s following through on his proposal and sanctioning the takeover of the country’s oldest existing monopoly, the sugar industry, in August 1955, an action directed specifically against the country’s single biggest capitalist, ‘Abbud. The pretext for the sequestration was a ten-year-old dispute over the state’s share of the monopoly rents, but more was involved, including ‘Abbud’s suspect political loyalties and reluctance to subordinate his firms and their resources to the state-building projects of technocrats like Qaysuni. As the U.S. embassy analysts argued, the regime was both frustrated by the organization of ‘Abbud’s group and “would like to break his power but…has been afraid to do so because of the effect on his industrial enterprises, which are so important to the country’s economy.”^[84]

The recourse to expropriation was, manifestly, a sign of the regime’s inability to enforce its own policy preferences in a critical economic sector (Chaudhry 1993). At the same time, it represented an escalation of the regime’s campaign to subordinate the major centers of power in the domestic political economy—the local families who constituted the core of the various investor coalitions and their firms—via an increasingly coercive alternative to regulation. Thus, by the end of 1955, ‘Abbud had been forced from the board of Bank Misr, while the sequestrator of his sugar mills and distillery joined the board of the massive bank-holding company, together with Nasser’s confidant and ex-DMNL (communist party) member, Ahmad Fu’ad, as the bank became a quasi-government agency (Ahmad Hamrush 1984: 51–54).

The partial nationalization of the ‘Abbud group in 1955–1956 is conventionally described as a departure from the main tendency in the government’s vaunted policy of “encouraging the private sector” until the October 1956 Suez War, and the sequestration of French-, British- and Jewish-owned firms that followed (the Egyptianization of the economy) is usually described as marking a policy shift determined first and foremost by “external” factors. This line of analysis necessarily deemphasizes the remarkably explicit intensification of the etatist-oriented, antimonopolist discourse of the regime after the March Crisis, including the branding of the business oligarchy as political hangers-on from another era who obstructed the return to democracy. And as O’Brien correctly notes, the new June 1956 constitution reflected and extended this ideological and programmatic shift (1966: 85).

Crucially, I have found the first clear evidence that the regime was preparing plans to take over other industries. Specifically, American records report numerous meetings between Egyptian officials and foreign consultants in 1955 to prepare for the formal nationalization of the power sector. The state was already a minority holder (40 percent), again mainly through expropriation of the king’s holdings in large ventures like the old Empain group’s power-generation companies (by 1955 the Empain group was being represented by a French state agency acting as trustee). According to U.S. embassy documents, Nasser was planning to nationalize the remaining privately owned shares, following his new, populist orientation.^[85]

Along these same lines, on 21 July 1956 the government formally absorbed the sugar company, declaring it a state-owned enterprise, though this passed relatively unnoticed in light of the more dramatic takeover of the French- and British-owned Suez Canal Company five days later. After July 26, though, the regime found it more useful to promote the fiction that ‘Abbud’s sugar company was another tentacle of the foreign octopus that had the national economy in its grip.^[86] No wonder that Americans in Cairo described the canal-company takeover and related expropriations as the outcome of trends “already clearly evident before the [July-November 1956 Suez] crisis.”^[87]

‘Abbud’s actions in the wake of the earlier and, for the local oligarchs, more decisive March Crisis reveal an investor desperately maneuvering to survive the regime’s escalating assault on business privilege. As we have seen, like virtually all other Egyptian elites, he had at least a decade earlier recognized the growing involvement of the U.S. embassy and U.S. capital in Egypt and attempted to shape this evolving relationship to his own advantage. But this bargain had always been one piece of a complex strategy, its terms reflecting the strategic position occupied by ‘Abbud and other local investors in post-1922 Egyptian politics, economy and society. With the collapse (or the defeat) of the liberal project between 1950 and 1954, the Americans were ‘Abbud’s last hope, yet most of them were betting on the state.

As the March Crisis unfolded, ‘Abbud was once again abroad, where, according to the boiler plate that was the Amin brothers’ specialty, the “king of Egyptian industry” was busy planning new joint ventures, including an oil-prospecting company, a paper mill, the expansion of his chemical complex, and other deals whose details could not be revealed (Akhbar al-Yawm 7 March 1954; al-Akhbar 14 July 1954). The projects grew more expansive a year later, as he traveled in London, Paris, New York, Washington, Miami and San Francisco. The Cairo dailies reported a final agreement on a new national airlines, meetings with the petroleum firms that would be “cooperating with him” in the Western Desert, and the signing of a new $6 million loan agreement with the ExIm Bank, along with an account of a recent interview with the Miami Daily News. ‘Abbud had assured readers in Florida that Nasser was “building the government on a strong democratic basis,” a claim that was no more true than any of these alleged new business triumphs (al-Ahram 12 May 1955; al-Akhbar 15 May 1955).

‘Abbud had little success after 1952 in completing the projects that had been planned before the Revolution, and his group’s three decades of expansion came slowly to an end. The expropriation of the sugar mills and distillery, which followed closely on the heels of the false ExIm Bank loan story, may have been connected to this disappointing investment record, though the takeover effectively ended ‘Abbud’s plans with W. R. Grace and the ExIm Bank for the paper mill.

Other reports from the period were wild exaggerations at best. For instance, he had, in fact, begun to develop a business relationship with W. Alton Jones, the investor who owned the large U.S. independent oil firm, Cities Service, and was a partner in concessions for the Western Desert and other parts of Egypt. Though ‘Abbud liked to claim he was busy developing the country’s oil resources, the reality is that an offer by Jones for a 10 percent share in Cities Service’s part of the consortium had never been taken up. More important, Jones was contemplating taking a large stake in ‘Abbud’s Suez factory but Cities Service instead abandoned the Egyptian concession by 1957.^[88]

In other words, ‘Abbud was agreeing voluntarily to cede part of his empire to outside investors, reversing a pattern of protecting and expanding the extent of personal ownership and control that had marked all his investment activity over three decades. The only exception to this pattern had been the defeat at the hands of the Empain group in the war between the bus and tram line interests in the mid-1930s. This unprecedented move was no doubt related in part to the difficulties in financing the hard-currency costs of expansion. At the same time, there was a more explicitly political logic involved, in that expanded American participation in his chemical-manufacturing venture just might serve to protect him against the threat of creeping nationalization of the oligarchs’ holdings.

The expansion of the Suez plant did take place in stages after 1952, though it is difficult to be precise about this development or to determine the extent of ‘Abbud’s personal investment. A plant to manufacture nitric acid was built at the site, for use by the military in the budding munitions sector. This plant was completed and preproduction final testing was underway by March 1957. When Jones declined to invest in the Suez plant, ‘Abbud reopened negotiations with the ExIm Bank to complete the original, pre-Revolution expansion plans, and the Eisenhower administration agreed to fund the project late in 1958 in conjunction with the Cairo subsidiary of First National City Bank, the first U.S. branch bank to open in the Middle East.^[89]

By the time the new plant was finished, it was no longer ‘Abbud’s. His holdings in Bank Misr were finally nationalized in 1960, and his own group’s core firms were taken over in 1961. On 22 October 1961, the government sequestered his family’s personal property and the properties of 167 other “reactionary capitalists” and put him on trial the following month. The charges were eventually dropped on the grounds of his service to Egyptian industry. Ironically, the first company he founded, his contracting and dredging firm, was the last to be taken over, in April 1963. He died in London, eight months later (al-Ahram 11–13 February 1960, 21 December 1961, 31 January 1962, and 29 December 1963; al-Akhbar 25 December 1961; Egyptian Gazette 22 October 1961; al-Jarida al-Misriyya 8 April 1963: 512).

Summary: The Origins of Egypt’s Comprador Bourgeoisie

In a manner reminiscent of Tal‘at Harb and his allies at the end of World War I, Ahmad ‘Abbud and his rivals rode the crest of a new, post–World War II nationalist wave through what turns out to have been a long last summer for Egyptian oligarchic capitalism. Thus, despite the exceptional expansion of national administrative capacity during the war, etatism remained at best a subordinate current inthe postwar political economy, while between 1950 and 1952, the‘Abbud–Sirag al-Din party pursued the most audacious governing strategy deployed in Egypt since the Sidqi dictatorship of 1930–1933.

Against the Wafd’s continuing powerful claim over the nation (and its business wing’s ever tighter grip over public resources), opposition elites were reduced to protesting corruption and, even more elusively, promoting reform. As a means for mobilizing votes, particularly in the cities where the Sa‘dist party did its worst at the polls (despite the standard identification of the party as “representative” of the country’s national bourgeoisie), the strategy proved useless.

We saw this corruption/reform counter-discourse deployed time and again against the Wafd or Wafd-led coalitions: in the late 1920s and the mid-1930s (Chapter 3) and again in the 1940s (Chapters 4 and 5). It may have been marginally more useful by 1951–1952 in securing the acquiescence of random intellectuals, investors and like-minded elites to another round of palace-based minority rule. But as we have also seen, it seemed absolutely essential to the interwar and wartime interventionist narratives composed by British embassy officials. In the 1950s, U.S. Ambassador Caffery and kindred souls came to rely on the same story. We can date its origins precisely: August 1951, the month that the Wafd’s foreign minister first threatened to overturn the Suez Canal bases treaty with Great Britain.

By the fall of 1951, as the Egyptian leadership made good on its threat and volunteers began a campaign of armed assaults on British personnel and property, the Americans denounced the turn of events as an act of desperation by a corrupt elite trying to stave off its downfall. That this is one of the rare moments when the views of the Truman administration coincide perfectly with contemporary marxist historiography would seem noteworthy in and of itself, but I believe it points to the same fundamental dilemma facing Egyptian communists and crusading American anti-communists at the time. Whether or not they were desperate, the Wafd’s business wing nonetheless fashioned a strategy that coopted broad sections of the polity, reinforced its own cross-class coalition and undercut its rivals. The task of promoting an alternative to the ‘Abbud–Sirag al-Din party appeared more daunting to those in ‘Abdin, Qasr al-Dubbara and Whitehall after October 1951 than at any other point in the Wafd’s history. Unfortunately for the Wafd, the concessions it demanded from the British were delivered in 1954, not 1951, to a U.S.-backed military authoritarian regime.

The process of undermining the business oligarchy and its dominant position in the political economy followed the extraordinary coup d’état in July 1952. The mechanisms that the new regime employed are well known, at least in their broad outline, and included the dismantling of parliament and the parties, expropriation and redistribution, new forms of economic regulation or, in place of regulation, nationalization by degree of key firms and sectors. As we have seen, the RCC’s antimonopoly project, to use its own term, unfolded in stages—first, with the support of what I called antioligarchic (or would-be oligarchic) capitalists, among others, and after March 1954 turning in a more populist direction (i.e., appealing more directly to sections of organized labor).

As was the case with every other extraconstitutional, dictatorial government since that of Muhammad Mahmud in 1928, the RCC obtained material and symbolic support from the dominant foreign power in the country, which in 1952 was the United States. I took special note of the Americans’ contribution to the key phases of this unfolding antimonopoly project and, in particular, their investment in an expanded public sector.

The reinvention of nationalist discourses was one of many practices which undermined the power of the business oligarchy. Thus, perhaps the most remarkable and heretofore enduring myth of the Revolution is that in 1956 foreigners rather than Egyptians controlled the country’s economy, or that after the “Suez invasion” the regime reversed its policies toward foreign capital generally. The reality is that in sector after sector of the economy, power had shifted steadily in past decades from shareholders in Paris, Brussels and London to owners and managers in Cairo and Alexandria—that is, to local capital. Within this local set, the 1919 generation of Egyptian investors such as ‘Abbud, Yahya, ‘Afifi, Farghali, Andraos, the Abu al-Faths, and post–World War II rising stars such the Mari‘s and ‘Imari came to displace the positions once occupied by minority resident owners and managers. We have dissected this process at length and, in particular, the political bases of the Egyptian business oligarchs’ rise. The general thrust of this argument is simply reinforced if one looks carefully at the impact of the 1956 sequestration of British-, French- and Jewish-owned firms.

Most of the firms were old, locally founded enterprises in sectors where private Egyptian investment groups and their joint-venture partners had since come to dominate the market—for instance, in building materials, textile production and cotton trading—with the result that government agencies now owned additional instruments with which to try to alter the preferences of Egyptian capitalists.^[90] At the same time, the single largest sequestered British asset, the £E 56 million refinery and distribution network of Shell Oil, was quickly returned to its legal owners. Thus, after 1956, the Nasser regime continued its policy of courting the transnational oil companies (and playing the independents off of them).

Other foreign firms, such as the Anderson Clayton subsidiary, the Nile Ginning Company, remained on extremely good terms with the Egyptian authorities and, as late as February 1961, had plans for increasing their investment in Egypt.^[91] If we think in terms of sectors, foreign capital probably showed no markedly greater propensity to invest in Egypt in the decade or two before 1956 than after, and the same kinds of firms—oil, pharmaceuticals, engineering, automobile companies—remained actively interested in the Egyptian market through the so-called socialist era (Handoussa 1974, Ahmed 1984, Tignor 1990). I agree with Tignor that the government showed a propensity to strike more advantageous bargains with foreign capital over this period, but disagree that the multinational corporations were “given little encouragement” or that his characterization of Ford’s experience holds for companies generally in the 1950s and 1960s.

The most important impact of the Suez sequestration for the economy’s “commanding heights” was probably in advancing the nationalization of the finance sector, including both branches of foreign banks (what we have since come to refer to as transnational banks), such as Barclays or Crédit Lyonnais, and smaller, local enterprises owned by “foreignized” Egyptian Jews such as the Commercial Bank of Egypt.^[92] The government’s misleadingly named Egyptianization program for the banking sector was designed to overcome the ineffective regulation of the money supply and credit flows by turning the main lending institutions into parastatals.^[93] Numerous other industrializing political economies pursued similar policies in the finance sector, including Mexico and South Korea. In fact, in 1963, Korean President Park Chung Hee claimed Nasser as an inspiration for Korea’s own authoritarian industrialization drive.^[94]

As Amsden (1989) and Jung-en Woo (1991) make clear, in the South Korean case, control of the finance sector was the means to discipline private capital while encouraging the country’s own business oligarchs—the Korean chaebol—to build up their vast private holdings. South Korean capitalists pursued an explicit strategy of privileged access to resources in the 1950s and 1960s to create the Samsung, Hyundai and other industrial empires (Mason et al. 1980). As I have tried to show, in Egypt under Nasser, business-state relations moved in the precise opposite direction.

The legacy of this unfolding confrontation with Egypt’s own oligopolists is found in places such as the entryway to the gothamesque Immobilia Building off Sharif Street, where the nameplates of ‘Abbud’s group of firms are still fixed to the wall; in Zamalak, where ‘Abbud’s twin villas house Helwan University’s fine arts faculty; in the Belgravia section of London, where ‘Abbud’s family now resides; and in key texts of the Revolution, where Egypt’s comprador bourgeoisie was invented.

Notes

Conclusion

Relatively little is known about the politics of investment in Egypt in the decades before the July 1952 Revolution, the period under study here. This point seems important to restate at the outset, and not only because it serves as a kind of reassurance for the time spent reading (not to mention writing) a book on an Egyptian capitalist and his role in promoting an electrification project and building a fertilizer industry. It is an argument for skepticism about the status of the conventional wisdom (whether about interest-group activity or the textile industry’s use of domestic cotton), for undertaking new work in these areas, but also for examining more rigorously than is common the assumptions that underpin the conventional wisdom. In other words, analysts need to reconsider the overarching narrative that has served since the 1950s as a template for constructing accounts of the “historical process” (Dawley 1991) in Egypt and that has been “made to stand in place of the sort of knowledge of political processes and struggle which academics do not have” (Kitching 1985: 31).

I called this approach colonial exceptionalism. As in other exceptionalist cases, the explanation of the emergence and consolidation of the capitalist mode of production (or of capitalist property relations or of production for the world market) in Egypt relies on comparison with a highly stylized account of the putative development trajectory of Great Britain and France. The starting point is the relatively abrupt imposition of capitalist relations on the Egyptian social formation “from the outside” via the country’s incorporation into the world market between 1820 and 1860, the great influx of foreign capital and immigrant capitalists between 1850 and 1880 and the formal colonial regime that emerged between 1875 and 1915—hence, “colonial.” What makes this process “exceptionalist” is an underlying similarity in logic and method such that the most basic explanation for German exceptionalism (whatever the character of its particular “pathology”) is the same as for Egypt and all other cases.

Exceptionalist accounts are generally not a celebration of difference but a way within the historical materialist tradition of accounting for some failure of the political-economic-moral order, which in Egypt’s case would be the apparent inability of capitalism or of the bourgeoisie to engender thoroughgoing transformations of state, society and economy, to support a nation-building project, to deepen the process of industrialization, to sustain the process of accumulation, etc. Central to this mode of thinking and writing about Egyptian history is a setof theses about the nature of capitalists and of capitalist-class formation.

The hallmark of Egyptian radical texts of the 1940s and 1950s is a fairly rigid application of Marx’s framework of forces/relations of production to Egyptian society. Thus, the class of rural private property owners that had emerged between 1840 and 1880 has been portrayed as a feudal order, against which stood a nascent, rising national bourgeoisie. But whatever potential might have existed for a bourgeois-led revolution was precluded by the continuing dominance of the colonial power and foreign capital. A new round of materialist-oriented historical analysis in the 1960s and 1970s argued, in contrast, for viewing Egyptian landowners as an agrarian bourgeoisie pursuing a kind of backward colonial capitalism (again, in comparison to “the West”) in alliance with foreign capital. As I noted in Chapter 1, analysts were at pains to concede that a measure of industrial investment had in fact taken place in Egypt and that British colonial officials had not opposed its development.

To level a blunt objection at these ostensibly less-mechanistic accounts of nation and class formation: the trajectory of the economy is seen to parallel precisely the fortunes of the national independence movement, which has long been condemned for having fatefully compromised with British power in 1936. Thereafter, a neocolonial coalition steers Egypt erratically yet inexorably toward the crisis of 1951–1952, and though the disparate strata that constitute the industrial bourgeoisie are portrayed as realizing what needs to be done in order to avert disaster and allow capitalism to develop, they are unable to act in their objective class interests.

Labor historians Joel Beinin and Zachary Lockman offer a succinct synthesis of the state of the art of these post-1950 Egyptian debates on capitalist development and class structure, one which provides as clear a statement as any of the essence of colonial exceptionalism:

By the end of the Palestine war it was becoming increasingly apparent that the coalition of class forces that had ruled Egypt since the end of the First World War was incapable of offering a solution to the political and economic crisis of Egyptian society. The large landowners who dominated both the Wafd and the opposition political parties clung tenaciously to their privileges, and were unwilling to concede even minimal reforms in the vital areas of land tenure, ground rent, and the taxation of agricultural property.…

The Egyptian industrial bourgeoisie and its representatives in Parliament, often identified with the Sa’dist party, acknowledged the need for agrarian reform, a more equitable distribution of wealth, and accelerated industrial development, though in practice, because the industrialists were closely linked to large landowning interests by family and social ties and derived much of their capital from agrarian interests, they shared the same social conservatism and fear of unleashing the anger of the impoverished rural and urban masses. Many proposals for economic and social reform were blocked by this fear.

The industrialists did not comprise an independent and self-confident class prepared to challenge the hegemony of the agrarian bourgeoisie. Egyptian industry did not, and still has not, transcended the limitations created by its original formation under the domination of European capital. In order to survive, Egyptian industrialists had to conciliate and ally with both the large landowners and the West to obtain capital and political support. (Beinin and Lockman 1987: 395–396, emphasis mine)

In its basic outline the more general story told here about Egypt is the story told countless times in the 1960s, 1970s and 1980s about many different countries, and it is the “original” German variant that is the central point of criticism in the book-length essays by Blackbourn and Eley in The Peculiarities of German History. As they wrote in their joint introduction:

One of our intentions was to probe the normative assumptions which proponents of the Sonderweg necessarily made about what a proper historical development looked like. And here, sometimes explicitly and often implicitly, it was “western” and most particularly Anglo-American and French developments that were taken as a yardstick against which German history was measured. There are, however, problems with this kind of approach. It can easily come to rest on a misleading and idealized picture of historical developments in those countries that are taken as models.…

A second series of points in our argument follows from the first. What was it, in terms of content, that was said to mark an aberration in German history when judged by western norms? It was, above all, the failure of a proper bourgeois revolution. Bourgeoisies are supposed to rise, but the German bourgeoisie was commonly depicted as moving disastrously through modern history in the opposite direction.…Each of our contributions also questioned a different part of the widespread idea of a “feudalized” bourgeoisie.…There was, of course, undoubtedly a form of social rapprochement between bourgeoisie and landowning class in Germany from around the 1870s. But we wondered how far this was exceptional in European terms and what it actually signified.(1984, pp. 10–13, emphasis mine)

Much of this book is concerned with the effects of a similar if not the same misleading and “idealized picture of historical developments” on the understanding of capitalists and politics during the first decades of Egyptian independence. Is there a remarkable underlying regularity in the unfolding of the historical process, despite otherwise profound cultural, spatial and temporal differences, or have analysts told a story about the course of the Egyptian political economy that is as rigidly scripted as any classical marxist stages-of-history model, however much they believed that they were arguing against such teleologies?

When Capitalists Collide combined a revisionist view of Egyptian investors with an alternative narrative about and trajectory for the early decades of capitalist development. In Part II, which forms the core of the study, I challenged the pivotal idea that a nascent national industrial project was somehow undermined during the course of the 1920s and 1930s. While I supplied both empirical and conceptual arguments for an alternative model of capitalist organization, collective action and conflict, at the same time, what is ultimately at stake is a collective interpretation of Egypt’s political economy that is rooted in the anticapitalist and third worldist discourses of the 1970s. From my vantage point, the cumulative impact of postdependency writings in Latin American and African studies, the critiques of nationalist industrialization strategies (rent-seeking states, state-owned enterprises, export-led industrialization) and, above all, the disillusion with and disappearance of non-market-based economic systems creates a different context for assessing Egypt’s past. The overall result is to see the process of capitalist development propelled by estate-dominated export production and the transition to import-substitution manufacturing in both a relatively more nuanced and a less exalted light. This is particularly so if the implicit comparison with Egypt circa 1945 is not the United States, Great Britain, Japan or France, but a more plausible range of cases such as Turkey, Syria, East and West Africa, Korea or the Philippines.

I do not mean to suggest that this process of capitalist development was uncontested; it was, and much of the exceptionalist historiography is itself testimony to the discursive dimensions of this challenge. But neither was its “failure” assured merely by the existence of well-documented British neocolonial ambitions or Egyptian joint ventures with embattled Manchester textile firms and London insurance agencies. By the end of World War II, the neocolonialist project itself had collapsed, opening up new possibilities for the national political class to consolidate power. At the same time, if one adopts the terms in which these issues are customarily posed, the balance of power between foreign and local capital in Egypt appears to have been shifting in favor of the local capital and, within this category, in favor of Egyptian nationals. Such a view is consistent with the kind of revisionist argument that Colin Leys, Nicole Swainson and others were advancing circa 1978–1981 in the debate on neocolonialism in Kenya.

My thesis is, however, based on an implicit aggregation of outcomes across discrete cases of competitive conflict—for instance, the ’Abbud group’s bargaining power with the EEC in 1942–1944—and of the shifts in locus of control inside particular firms or sectors, as in the case of Beida Dyers and the textile industry more generally. I have drawn a sharp distinction between this model of competing investors and the more familiar model of capitalist class- or class fraction–based action via their putative representative associations. Such an outcome-by-aggregation or investment-conflict approach requires no prior assumption about collective consciousness (not to mention authenticity).

The various institutional arrangements for regulation of the economy that became sedimentized over the course of the late nineteenth and early twentieth centuries—oligopolistic markets, the central role of bank-holding companies associated with small numbers of wealthy urban and rural-based families, cross-sectoral investment patterns, etc.—produced much of what has since come to be identified as the emergence of an Egyptian national industrial bourgeoisie, which was composed, nonetheless, primarily of settlers, noncitizens, representatives of foreign firms, landowners, bankers and cotton exporters!

The significance of the feudalization argument in the Egyptian case—the idea that capitalists were unable to pursue their objective class interests because of their dependence on and social interconnections with landlords—is the role it plays in filling in the account of bourgeois failure and its ready availability to stand in as the alternative internal explanation either for fewer industries on the margin or, more incredulously, for Egypt’s not having become an advanced industrial power once the so-called cruder claims about imperialism and dependency (the external factors) have been partially displaced in various texts.

The origins of accumulation in large landownership and the specific forms of production instituted there are clearly important, but the implications for the history of Egyptian industry building are more often asserted than developed systematically, beginning with the implicit counterfactual.^[1] If the assumption is an alternate development trajectory in the 1870s and 1880s underpinned by a social coalition that did not include a class of large landowners, say, along the lines of a more autonomous peasantry and state bureaucracy, then, as the Turkish case suggests, a distinctly possible outcome could have been fewer large fortunes, less rapid accumulation and less private manufacturing industry.^[2]

Alternatively, if the thrust of the feudalization argument is, as it often seems, that over the 1920s, 1930s and 1940s the dominance of large landowning interests checked the growth of the manufacturing sector, then there are competing explanations, beginning with the oligopolistic structure of the sector itself. The point is that until now the claims about the effects of landlord dominance or feudalization tend toward the metaphysical, assuming that some force or set of forces must have prevented the bourgeoisie from playing its normal role as history maker.

In Chapter 2 I reinterpreted the existing research on how basic elements of Egypt’s capitalist market system—(1) the institutionalization of private property rights in the Egyptian countryside, (2) the formation of a class of large estate owners, and (3) the development of new urban businesses, professions and manufacturing enterprises in the interstices of the booming, foreign-funded, large-estate-based cotton-export economy—were forged in the mid-1800s and then extended in the aftermath of the British occupation in 1882. A key point in that chapter is that Egypt’s laissez-faire-era economy was not some spontaneously emerging process (though also not something purposely constructed in all its dimensions by political authorities either). At the same time, its organization did not remotely resemble the ideal of a perfectly competitive market. The ensemble of practices from the mid-1800s that we refer to as state formation and that is most often traced through an evolving system of bureaucratic institutions (the Finance Ministry, public works, the Ministry of the Interior, the hydraulic regime) also entailed the institutionalization of a system of private oligopoly in landownership, commerce and industry.

The processes of state and class formation were bound up with one another in ways that to me do not seem to be usefully captured in the idea that “the state” was “creating” classes in Egypt, particularly when that idea tends to connote a willed or intended objective (Waterbury 1983, Anderson 1987, Richards and Waterbury 1990). Such a view rests once again on a highly idealized view of capitalism’s emergence in “the West.”

Accepting for the moment conventional ways of defining the two classes in Egypt, the emergence of the bourgeoisie and of the landowning class not only happened at roughly the same time but rested on the same kind of privileged access to the resources of the khedival state in formation. As Owen (1981a: 535–536) notes about the creation of landed estates,

[This process] had its origin not in the development of local market forces but in an exercise of state power. It was Egypt’s rulers who handed over a large part of the Delta to government officials and Egypt’s administrative system that allowed others to seize land for themselves.…The first tentative move toward the establishment of private property in land was entirely the work of the country’s rulers, for reasons of their own, and they were always prepared to disregard what some have taken as the spirit of their policy in the interest of building up their own holdings or confiscating the assets of an official . . . who had fallen from grace.

I have tried to document the parallel process at work in the formation of Egypt’s “modern” industrial and commercial sectors.

Yet I would argue that the kind of arbitrary exercise of absolutist-like authority that Owen and others see as constitutive of this mode of class formation was rapidly checked by the occupation, the capitulatory regime and the gradual institutionalization of the private market economy. Certainly, the British administrators found the Capitulations and Mixed Courts impeding their own absolutist-like ambitions, while the business community, Britain’s foreign rivals and leaders in the Egyptian national movement came to see the Mixed Court system more favorably, for the same reasons (Brown 1993). Put another way, one effect of state formation—that is, the Debt Administration’s and later Cromer’s pursuit of fiscal reform—was the creation and consolidation of institutions and practices that rapidly empowered investors.

Whatever the conceptual value of maintaining the distinction between landowners and bourgeoisie, particularly industrial bourgeoisie, the distinction is not easily made at the sociological level, where, if anything, we run the risk of underestimating the degree of indivisibility between landowning and capitalist families. There is probably little ground for ever seeing large landowners and bourgeoisie as two distinct class cores in Egypt that at some point start to merge, but certainly there was nothing gradual about this process.

For instance, to adopt a familiar if not very convincing model of class formation, did “class consciousness” proceed qualitatively faster and further than feudalization? If we use the standard marker of “class-for-itself” type development in the Egyptian case—namely, the formation of organized interest groups (e.g., the Cotton Growers Association)—the answer would be no, given that such associations emerged around the first decade of the twentieth century.

Thus, if “[b]y the Second World War there was . . . no sharp distinction between the agrarian and industrial sections of the bourgeoisie” (Beinin and Lockman 1987: 11), then this was equally true at least a generation earlier, at the time of the First World War, and back even further. The same family sets or individuals, beginning with Tal’at Harb, avatar of the national bourgeoisie, helped to found and served as heads of virtually all the country’s business associations, including the Federation of Industries, the Property Owners Association, the Cotton Growers Association, the Cotton Exporters Association, the Egyptian General Agricultural Syndicate. This is unsurprising. A small number of family-based or similarly closely linked investor coalitions (e.g., the Suarès, Yahya, Misr, Salvago, Rabbath groups) all had cross-sectoral holdings in banking, trade, urban real estate, cotton export, manufacturing and rural land-reclamation companies, not to mention their many individually owned estates.

As is often noted about this kind of multisectorally oriented local business oligarchy, circa the Second World War, “There were divisions and conflicts among landed, financial, commercial, and industrial interests as well as among foreign, mutamassir (quasi-Egyptian) and Egyptian capital before 1952, but there was also considerable overlap and a fair degree of common interest” (Beinin and Lockman 1987: 11). The point is roughly correct, though it hardly exhausts the matrix of conflict and cooperation within the political economy, and it is just as true for earlier decades. Ignoring, as I do in this book, conflict between capital/landlords and peasants/workers as a constitutive part of the narrative of the development of capitalism in Egypt, there were “divisions and conflicts” between regions, between large and small firms, across industries or sectors (e.g., shipping, road and rail transport) and, as I have shown in some detail, among competitors.^[3]

There are understandable, theoretically grounded, historically plausible and politically compelling reasons why analysts privileged two type of divisions rather than others during the formative phase of theorizing about peripheral political economies. In any particular account, the underlying logic is that the degree or extent of industrial development attained in Egypt was a function of the bourgeoisie’s autonomy vis-à-vis foreign capital and the landlord class. What I have tried to show in this book, however, is that the argument is wrong in the Egyptian case. All I can do here is note that the kinds of evidence—in terms of definition of interest, how interests acted, and how policy outcomes emerged—used to illustrate the alleged political effects of feudalization in the Egyptian case are generally similar to the kinds of evidence that allegedly demonstrate how foreign capital and its comprador allies sapped the strength of the bourgeois project.

In the third and final part of this book, I pursued the logical implications of this critique of colonial-exceptionalist accounts: questioning the grounds for continuing to see inscribed in the complex and causally overdetermined events of 1950–1952 the overarching logic of an aberrant capitalist development path and investors collectively incapable of taking even minimal steps to resolve the country’s deepening dilemmas in their own interests, though the solution has been made to appear so obvious.

Structural changes—land reform to help the peasantry and free capital for industrial development, a state-sponsored development program, a commitment to improving the standard of living of the workers and peasants, complete sovereignty in both the political and economic spheres—were essential to removing the barriers to further economic development.. . . While the industrial interests would have benefited from such measures as land reform, they were generally too closely tied to conservative agrarian interests to take the initiative (Beinin and Lockman 1987: 12, emphasis mine).

Again, Beinin and Lockman provide a cogent synthesis of theprevailing wisdom traceable from Issawi’s (1954) study of the Revolution to Zaalouk’s (1989) rehearsal of its betrayal, while their own approach to issues of working-class formation and identity politics in Workers on the Nile goes far in challenging many of the conventionsof colonial exceptionalism. But the inclusion of ideas such as “complete sovereignty in both the political and economic spheres” in a checklist of development prerequisites is a potent reminder of the strong strand of romanticism that is woven through such views (Phillips 1977).

In this first detailed account of the role played by the country’s leading capitalists in the events that led up to the July 1952 army takeover, it was both inevitable and overdue that a discussion revise the relatively more sweeping judgments about class and politics—such as Wafd = landlords, Sa’dist = bourgeoisie—that were first put forward in Egyptian marxist texts in the 1950s and 1960s. Chapters 5 and 6 show that investors were certainly divided about what the future portended and what was the best strategy for dealing with it. The benefit of my approach is that the investors are actually identified. But there is ultimately little that distinguished them save that some had captured the resources that others coveted. Of course, such forms of instrumentalism are hardly unique in the annals of postcolonial politics (e.g., Strachan 1976, Robison 1986, Hawes 1987).

The rent seeking that British consuls never ceased championing on the part of their own national captains of industry and that underpinned the creation of much of Egypt’s “modern” economy, was just as routinely read as a sign of the hopeless venality of the Egyptian elite when practiced by ’Abbud and his rivals. The archives of both the British and the American governments are bulging with the records of interest conflicts over rent seeking and industry building in Egypt. And these texts evince a clear pattern of escalating protestations of corruption and demands for reform by their authors at those precise points when investment conflicts were perceived to be threatening British or, increasingly after World War II, U.S. interests.

More important than what the declassified records predictably reveal about the cynicism of a host of actors from the past, like U.S. Ambassador Caffery, and those who are still the occasional subject of U.S. embassy reporting today, like Sirag al-Din, Mustafa Amin and Muhammad Haykal, is the surprising and powerful support they lend to critics of the idea of the capitalist class as a corporate political agent with a collective class interest. The notion that the Egyptian industrial bourgeoisie in particular believed in and pursued some collective interest in the redistribution of private estates has long been taken for granted. Perhaps some individual investors had come to champion this particular strand of post-1945 development doctrine, though I found little evidence of this in the actions of Egypt’s biggest industrialists. I did, however, uncover a great deal of evidence that investors and investment groups were powerful actors who were involved in virtually every facet of governance of the state and economy.

The post–World War II years were hardly auspicious for the efforts by the political class to consolidate power over the postcolonial state. The resurgence of urban labor and student protest in 1945–1946, the mounting of a sporadic if still ominous campaign of political assassinations and bombings of European and Jewish institutions, the agitation over the Palestine crisis, etc., all can be read as signs that relatively broad strata of Egyptians were intent on reshaping the political agenda, even if toward different ends. Certainly, the institutions that buttressed the oligarchs’ influence would not go unchallenged. The Canal Zone crisis of 1951–1952 epitomizes this process of contestation from below, though my own reading was intended as a caution against a too close-ended and mechanistic account of class, politics and history at this juncture.

The premise that the treaty-abrogation issue, the fighting in the Canal Zone and the Cairo fire of January 1952 were all reflections, fundamentally, of the deeper structural crisis of Egyptian society rooted in a backward form of colonial capitalism and in a feudalized bourgeoisie that was incapable of offering a solution is no longer convincing. After all, with the single exception of land reform, the specific economic policies followed during the early years of the army regime were developed by and were underway in the late 1940s and early 1950s—under the Wafd. The new military leaders (and their U.S. backers) likewise were no less compelled to pursue the canal bases issue. And though a great deal of theoretical weight is attached to the army’s land-reform project, in reality, its purposes, execution and consequences had little to do with deepening capitalist development in Egypt. Richards, convinced that it could have mattered, concludes that the failure to pursue “the kind of far-reaching land reform carried out in South Korea” is “one of the many tragedies of modern Egyptian economic history” (1992: 44). Still, there is no need for a complicated sociological analysis to understand industrial investors’ lack of enthusiasm.

The confiscation of the assets of the royal family and two hundred or so other powerful families may have been popular, just and useful to the officers in engineering the transition to populist authoritarianism, but it did little for capitalists or capitalism in Egypt. The counterfactual—a July 1952 government pursuing Mahir’s alternative strategy—is worthwhile positing, even though one may well prefer the course ultimately followed by Nagib and Nasser. Among other cases in Latin America, the Brazilian experience is a reminder that a type of capitalist development similar to Egypt’s continued to unfold and deepen in the absence of land redistribution. And although the national bourgeoisie, land reform’s putative champion, is now said to have extended its dominance in Egypt and across the postcolonial third world (Ahmad 1992), land reform itself has virtually disappeared as an international norm.

At the same time, a moment’s reflection on the post–World War II history of Asia, Central and Latin America can serve as a reminder of the tolls exacted by and on those who in the past, and no doubt with less certainty than historians, identified other revolutionary moments in countries such as Vietnam (Kolko 1985), El Salvador (Dunkerley 1982) or the Philippines. In the Philippine case, there were scathing critiques inside the New Peoples’ Army of their leaders’ past errors in acting on predictions of a revolutionary situation in Manila in the mid-1940s (Lachica 1971: 125–126, 302–316). And recall that this was in a country where armed revolutionary cadres already formed a highly disciplined fighting force opposing the state. The Egyptian countryside was a placid sea in comparison, while the country’s small and splintered communist leadership(s) had little success in mobilizing the cities. Historians do not have to pay for errors in judgment. Still, there is no avoiding the need to revisit the historical-structural account of the origins and unfolding of the July 1952 Revolution, which is what colonial exceptionalism ultimately purports to explain.

Regarding the ideas about the bourgeoisie that are a legacy of this particular approach to historical-comparative political economy, it is no longer convincing to view and speak of a capitalist class as a potential or partially realized collective agent or agency. Rather than narrating (heroically or tragically) the process of evolution of that agency, researchers should think of class or classlike effects that are institutionalized in different ways and in different degrees through various practices, many of which have nothing to do with the willed objectives of vast numbers of capitalists or the representative associations of those who own the means of production. Blackbourn and Eley (1984) make a similar point more elegantly and using alternate language; more important still, they begin to develop the analysis systematically as does, from another direction, Mitchell in Colonizing Egypt. (1988). I looked at a different set of Egyptian institutions, practices and class effects in this book, employing the concept of business privilege.

Though I paid relatively little attention to the discursive dimensions of this process, Owen’s (1981b) argument, that the versions of economic nationalism promoted in the 1920s and 1930s were important mainly as a strategy to preserve and extend private market-based, oligopolistic privilege, is undoubtedly correct. Egyptian capitalists pressed their claims for more power, wealth and industry on the basis of protecting Egypt against foreign domination. In the 1940s and 1950s, economic nationalism was being reinscribed with a radical, indeed anticapitalist content and deployed in a struggle with the oligarchs.

The invention of Tal’at Harb as a direct ancestor of etatism in Egypt and of Ahmad ’Abbud as the avatar of neocolonial domination marks a moment of successful resistance to the expansion of capitalism and of private market privilege, a moment that many Egyptians have not yet ceased defending.

Notes