Disempowerment without expropriation: Egypt’s old oligarchy under Sisi

Abstract

ABSTRACT What happens to oligarchs when they get politically disempowered? This article looks into changing private property relations in economies dominated by oligarchs in the global south during unstable times of popular unrest and frequent regime change. It considers the case of Egypt after the 2011 revolution. Paradoxically, the old oligarchs retained their assets despite losing political influence. I argue whether oligarchs survive regime change without being expropriated depends on the perceived importance of their assets by the new rulers for the regime’s political, financial and security stabilization. In turn, this depends on how well-established are the oligarchs in critical areas like foreign currency-earning and high-technology sectors. Moreover, the older, more concentrated and transnationalisssed the old oligarchs’ assets are, the higher the perceived cost of expropriation becomes for the new regime. In Egypt, the military-backed regime that seized power in mid-2013, had to count on the oligarch-dominated private sector for economic recovery as it did not enjoy alternative stable revenue sources of its own. The final outcome of such institutionally-bounded rationality by the regime was the old oligarchs’ disempowerment but not their expropriation, pushing for a differentiated oligarchy. This contributes to the literature on state-business relations in the global South.