EGYPT: STATE, SOCIETY AND ENERGY IN A VICIOUS CIRCLE Robert Springborg

EGYPT IS ‘INFORMATION SHY’ Open Budget Index: 80 th out of 93 countries ranked 2013 Budget “secret document” released on court order Budget a document of hope and faith Special funds of $10 billion off budget World Press Freedom Index: 159 th out of 180 countries ranked Egypt accounts for at least 10% of all imprisoned journalists Extractive Industries Transparency Index: Not even candidate country

STRUCTURAL IMPEDIMENTS TO CIVIL SOCIETY PARTICIPATION IN ENERGY POLICY MAKING Deep state control of all government Parliament weak or absent Judiciary vitiated by control and parallel military courts with jurisdiction over energy installations Regulatory agencies hobbled, e.g., Central Audit Organization State ownership All fossil fuel reserves Land upon which most reserves found EGPC and EGAS Contracting companies dominated by military and ministry Absence of private firms as sources of independent information

CIVIL SOCIETY’S LIMITATIONS FOR OVERSEEING THE ENERGY SECTOR General dialectic of authoritarian state, weak society Lack of capacity to gather and analyze information Dearth of university departments or other institutions specialized in energy despite high quality think tanks (e.g., ERF and ECES) Few energy professionals Those knowledgeable about energy linked to government (e.g., Citadel) Small private energy sector Dominance of foreign firms and experts Government entities occupy policy discussion space (e.g., IDSC, New and Renewable Energy Authority, Electric Utility and Consumer Protection Agency Government relies on security/intelligence to read popular pulse on key energy issues such as subsidy reform

Civil Society Behavior Vacillate between political condemnation, protests and terrorism (e.g., gas sales and pipeline to Israel) Political parties do not adequately address energy in policy platforms Unions in energy sector inactive Media constrained directly by government and indirectly by media magnates’ links to govt

ECONOMIC COSTS OF STATE DOMINATION OF ENERGY POLICY AND MANAGEMENT Poor returns from energy exports, e.g., $11 bn estimated from Israeli gas exports Losses due to corruption Dutch Disease exacerbated Subsidies provided disproportionately to the wealthy Broader subsidy reform difficult

POLITICAL COSTS OF STATE DOMINATION OF ENERGY POLICY AND MANAGEMENT Reduces “structural power of capital” upon which civil society depends Enhances resources of deep state and its patronage power Failure to engage effectively undermines civil society image and sense of competence

THE VICIOUS CIRCLE—CONCLUSION Egypt case confirms “oil curse” for poorly governed polities Bottom fifth of countries on all six of World Bank’s governance indices and declined since 2005 in tandem with rising gas exports Hydrocarbon wealth reinforced authoritarian state and undermined civil society Oil curse contributes to dialectic of protest and repression Deep state now retrenching and thus reinforcing oil curse: More domination of state itself and of civil society Contracting with IOCs on yet more favorable terms to restore gas and oil production Deep state taking yet more direct control of energy