The missing link

24 May 2015

The Egyptian government is pushing through a series of new laws, but the lack of a parliament raises questions about the legitimacy

  • More economic policy laws in progress
  • Future government could review any new laws passed
  • Plans for an election at stalemate, the earliest timeframe for a general election is September or October

At a recent business briefing on Egypt’s prospects following the mid-March development conference in Sharm el-Sheikh, Sherif Oteifa, a senior official in the Investment Ministry, listed eight important economic policy laws that had been passed over the previous two years and five upcoming pieces of legislation.

There have also been several laws passed affecting areas outside the political sphere, for example, curbing the right to protest and allowing civilians to be tried by military tribunals. One thing missing from all of this legislative vigour has been a properly constituted legislature.

Political legitimacy

In some respects, the absence of a parliament is an advantage. Legislation by decree is more efficient, and the government has insisted it consults widely with stakeholders before signing off new laws. Moreover, the process is being overseen by President Abdul Fattah al-Sisi, who commands a strong popular mandate.

Yet there are risks. Some laws are already facing legal challenges; for example, the objections being raised in the courts to the new taxes on capital gains and dividend income. A future parliament could push for a wholesale review of the body of laws passed by decree. The new constitution states that parliament will have just 15 days to review decrees approved in the absence of a legislature, but that article could itself face a legal challenge, given the sheer volume of legislation involved.

This state of affairs has suited vested interests that consider democratic accountability to be an inconvenient intrusion

Beyond the practical and legal questions on the robustness of the legislation passed since Al-Sisi ousted Mohamed Mursi as president in 2013, there is the broader issue of the political legitimacy of a legislative programme with no input from elected representatives of the Egyptian people. It could be argued this does not matter because of the exalted status of the president and the patchy record of Egypt’s previous parliaments (a record that stretches back, with some interruptions, to the 1860s).

However, every government that has held power since the uprising against Hosni Mubarak at the start of 2011 has claimed to rule on the basis of popular legitimacy, including that conferred by free and fair elections. Al-Sisi himself announced a political roadmap in July 2013 that envisaged the passage of a new constitution, the election of a parliament and the election of a president within a period of nine months. The implied sequence in his roadmap was changed at a late stage in the drafting of the constitution, which resulted in the presidential election coming first.

It has now been almost a year since Al-Sisi assumed office, and no date has yet been fixed for the election of the single-chamber parliament specified by the constitution. The delay is largely a consequence of the legal and constitutional logjams that have beset the Egyptian parliamentary system for years, but it is hard to avoid making the observation that this state of affairs has suited powerful vested interests that consider democratic accountability to be an inconvenient intrusion.

During the Mubarak era, there were dozens of legal suits brought against successive elections on procedural grounds, although the widespread view that most of those elections were blatantly rigged by the security services was not tested in the courts.

The first post-Mubarak parliament, in which the Muslim Brotherhood and the Salafist Nour party held a large majority, lasted only six months before it was dissolved at the recommendation of the Supreme Constitutional Court (SCC) in June 2012. Mursi tried to organise fresh elections after pushing through a new constitution at the end of 2012, but made little headway, as his proposed election laws were repeatedly questioned by the SCC.

Electoral districts

The basic set of laws covering the forthcoming general election was passed by the interim president, Adly Mansour, just before Al-Sisi assumed office in June 2014. However, there was one important gap in the legislation. Article 102 of the new constitution specifies that the division of electoral districts must ensure “fair representation of population and governorates, and equal representation of voters”.

The government drew up and passed a law on electoral districts at the end of 2014, and the whole package of electoral legislation was passed to the SCC. The court delivered its ruling in March 2015. It had no issue with the most controversial aspect of the electoral laws – the 80:20 bias in favour of individual candidates as against party lists – but it did find fault with the districts law. The government has now redrafted the districts law, and is awaiting a decision from the administrative court of the State Council in mid-June on whether the law needs to go back to the SCC.

The political arena has been left to the nationalist core supporters of President Abdul Fattah al-Sisi

If there are no more procedural wrangles, the general election could take place in September or October. The parliament would comprise 595 seats, of which 448 would go to individual candidates standing in 203 constituencies, with the number of members from each district ranging from one to four. There will be 120 MPs elected from national lists drawn up by parties or individuals, and 27 MPs will be appointed by the president.

The long delay has sapped whatever enthusiasm there may once have been for the elections. The appeal of this supposed democratic exercise has also been undermined by the severity of the security crackdown over the past two years against the Brotherhood and civil society activists.

Election boycott

Several political parties have declared they will boycott the elections. They include: Strong Egypt, a party led by Abdel-Moneim Abdel-Futtouh, formerly a leading figure in the Brotherhood; the Dostour party, which was founded by Mohammed ElBaradei; the Popular Current, led by Hamdeen Sabahi, who was Al-Sisi’s sole challenger in the presidential election; and the Socialist Alliance, one of whose activists, Shaimaa el-Sabbagh, was shot dead by police during a peaceful protest in Cairo in January. The Freedom and Justice Party, set up by the Brotherhood in 2011, has been banned.

With the exclusion of the Brotherhood and the disenchantment of the non-Islamist critics of Al-Sisi’s rule, the political arena has been left to the nationalist core supporters of the president, dominated by business leaders and figures with connections to the security services. This core support has yet to coalesce into any form of coherent political structure.

Several veteran political figures, such as former prime minister Kamal el-Ganzouri, have tried to put together national political lists to fight the election, but such efforts have been undermined by personal rivalries. Al-Sisi has stood back from the political fray, and has so far given no indication of what kind of a parliamentary majority he envisages to support his government’s programme. The election will in any case not have a direct impact on the make-up of the government, as the constitution states that neither the prime minister nor cabinet ministers may be members of parliament.

Regime critic

One of the few substantial critics of the Al-Sisi regime likely to secure a seat in the new parliament is Ziad Bahaa el-Din, who served as deputy prime minister for economic affairs between July 2013 and January 2014, when he resigned for the stated reason that he wished to focus on his political career. El-Din, a corporate lawyer and former head of the Investment Authority, is one of the founders of the Egyptian Social Democratic Party.

In a recent column for the local El-Shorouk newspaper, he wrote that the gains the government had secured through delaying the election of parliament and suppressing dissident voices were ephemeral, and had merely created the illusion of a national consensus on the basis of “an unopposed leader” and an “unaccountable government”. El-Din urged the country’s leaders to recognise that “diversity and difference is strength and that an absolutist state brings neither development nor progress”.

Fast-track legislation to improve business environment

Egypt’s Investment Ministry has highlighted a raft of new and pending legislation that the government has drawn up with the aim of improving the business environment. The laws that have been passed include:

Investment law – The new law promises to create a genuine one-stop-shop for investors to secure licences, procure land and obtain utility connections.

It will also set up a standard framework for dispute resolution, including a clause that will make arbitration rulings binding on the government, but not on investors.

However, the text of the law had not been published by the Invetment Ministry as of early May, and much of the detail relevant for businesses will be in the executive regulations, which have yet to be drawn up.

Income tax law – A unified top rate of 22.5 per cent will be set for companies and individuals, compared with 25 per cent now, and the 5 per cent surcharge on earnings of more than £E1m ($131,320) a year will be abolished. The law has yet to take effect, as the executive regulations have still to be drawn up.

The Finance Ministry is pushing for the 22.5 per cent rate to apply in special zones such as the planned Suez development corridor, while the Investment Ministry has indicated it would prefer a lower rate of 10 per cent to be applied.

Mining law – Legislation providing for a new tax and royalty structure for mining concessions has been passed, and the government has pledged to issue the executive regulations soon.

Electricity law – The government says it has passed a law that would restrict the state’s role in the power sector to regulation and supervision.

Upcoming laws planned by the government include:

Value-added tax (VAT) – A long-awaited move to replace the general sales tax with a VAT system

Customs law – The Finance Ministry aims to update legislation covering the customs system with the aim of streamlining the access of imported goods to the local market.

Companies law – This is aimed at easing the procedures for firms to raise new capital, and setting a three-year limit for company liquidation.

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