Egypt’s military-industrial complex has enjoyed burgeoning growth since the last decade owing to sustained government support, and a need to keep the military forces modernized and in top fighting shape. Cairo has developed its local defence and security industry that produces a range of products from small arms to armoured vehicles and naval vessels. The local industry has successfully signed co-production agreements with quite many countries, including the United States and France.
While the Egyptian armed forces are the largest in the region at approximately 865,500 personnel, much of the equipment used is quite dated, and quite a lot of its military equipment was destroyed during the 1973 October war. Thus, there was a need to modernise the Egyptian armed forces up to modern standards.
For a long time, the Egyptian armed forces have been the major market for Egypt’s arms industry, at least initially. Large quantities of new heavy arms have been imported fully assembled. Increasingly, though, arms deals are being made based on co-production, with Egypt factories making the final assembly and parts production. In some cases, whole weapons are being produced under license.
Six new small arms factories were recently opened for the production of both arms and ammunition, mostly under license from European companies. Other new arms production facilities which covered a broad range of weapons including planes, ships, missiles, ammunition, bombs, heavy guns, armoured vehicles, and light weapons were also established.
Egypt is also developing a maintenance capability for aircraft and other sophisticated military hardware, enabling it to become a regional maintenance centre as well as a major arms supplier to the Middle East and Africa.
But what are the benefits of a fully matured defence industry without customers to export to?
Egypt’s defence industry; early beginnings and lofty prospects
In the year 2020, Egypt announced the launch of a three-year Egyptian weapons manufacturing plan to achieve self-sufficiency and export Egyptian weapons abroad. This initiative was earmarked a total investment of about 7.5 billion Egyptian pounds ($479 million), and the plan includes the modernization and addition of 84 production lines. After its implementation, Egypt will wean itself off dependency on arms importation from foreign suppliers.
Egypt’s defence industry has a long history over the past six decades which makes it the oldest and largest among the Arab states. It grew largely in the 1950s—60s and reached its highest point in the 1980s after extensive collaboration with the West. Although later on, it suffered from over-dependence on Western companies for procurement and co-production, especially the U.S., and has limited R&D. This resulted in most of its military factories being used for manufacturing consumer goods for the civilian market for profit.
Although, Egypt at the time continued to produce basic weapons systems, but these did respond to the needs to combat terrorism and asymmetric warfare. After a political crisis in 2013, where a war on terrorist groups erupted, and the U.S. withheld arms supply, the Ministry of Military Production (MoMP) attempted to revive defence production through new co-production initiatives with international arms firms.
Egypt also made efforts to reduce its dependence on the U.S. by seeking procurement from other states such as France, Russia, and Germany.
In the 1980s, Egypt’s military-industrial capacity reached 30 factories with about 100,000 employees and an average of $400 million value of production. Arms exports jumped from $30 million in 1981 to $550 million in 1988. Egypt at the time assembled French jets, Chinese fighters, Brazilian trainers, British helicopters, British missiles, aircraft engines, guns and ammunitions, and much more. These systems enjoyed widespread orders from oil-producing Arabian Gulf states and Egypt’s African neighbours.
Even the U.S. granted Egypt the right to export arms to the American market, but was mainly symbolic as no deal were signed. Egyptian factories turned out larger guns and munitions, sold twin 23mm air defence gun system (a towed anti-aircraft gun with two muzzles) to Morocco in 1983. The towers anti-aircraft design is based on a Soviet gun, and a number of countries expressed interest in purchasing it, including Sudan, Somalia and Iraq.
During this promising time, Egypt made considerable profits from arms sales, especially those to Iraq to use in its long war against Iran as well as to the Afghan mujahidin, who were backed by the U.S. against the Soviets. Military sales in 1982 reached $1 billion, making weapons Egypt’s second-largest source of export revenue after oil. Much of this trade was with Iraq, financed by subsidies from the Gulf states. However, because much of Egypt’s defence industry was still developing, it suffered from technological difficulties and a noticeable problem with sustainability.
Decline and conversion to civilian production
By the end of the 1980s, Egypt reduced spending on military industries because of budget constraints, but the industry needed around $4-6 billion to properly develop. By the early 1990s, a lack of technology and budgetary problems led to a state’s determination to convert considerable parts of the arms production lines into civilian manufacturing to keep them functioning.
In hindsight, by the early 1990s, Egypt had at least 25 publicly known military factories: 16 functioned under MoMP and nine under AOI, mostly built between the 1950s and 1970s. By 2010, 40 per cent of the MoMP’s production turned civilian, and the remaining 60 per cent was still military. While by 2009, 70 per cent of the AOI’s outcome became civilian, with only 30 per cent still military.
Revival of Egypt’s defence industry
Up until 2013, most of Egypt’s procurement came primarily from U.S. firms except for a small portion from European manufacturers. These purchases included vehicles from AM General; Apache AH-64D from Boeing; CS gas allegedly used in Tahrir from Combined Company; M1A1from General Dynamics; F-16C/D from Lockheed Martin; and Black Hawk aircraft from Sikorsky (UTC). Aside from this, Egypt received sales from the British multinational BAE Systems of aircraft KF-16 C/D; airbuses from the joint German-French company EADS; and a joint Turkish-British BAE System project of tracked and wheeled armoured combat vehicles.
The turning point for Egypt’s defence industry was in 2013 when a crisis with the United States resulted in funds being withheld forcing Egypt to make serious attempts to diversify its sources of procurement and increase recent co-production initiatives.
The crisis began in the summer of 2014, when then minister of defence, al-Sisi overthrew the Islamist president and subsequently formed an interim government., and in a subsequent election, al-Sisi swept the presidential election and assumed full power.
As a result, the Obama administration suspended U.S. arms shipments due to Egypt as part of its aid package for two years, until March 2015 after a visit by U.S. Secretary of State John Kerry to Cairo, during which he attended an international economic conference to support the military regime’s economic development plan.
In addition, a war on terrorist groups that proliferated in the country upon deposing the Islamist president, especially the Islamic State in Iraq and the Levant (known as ISIL or ISIS) in the Sinai Peninsula, and their repeated attacks across the country further pressured the military to diversify and co-produce new weapon systems.
This forced Egypt to reduce its dependency on U.S. arms by diversifying and seeking new co-production agreements with non-American firms.
Exactly three weeks after the al-Sisi-led overthrew the Islamist president, the Pentagon suspended a shipment of 12 Lockheed Martin’s F-16 fighter jets to Egypt, this was followed by freezing the shipment of 20 Boeing Harpoon missiles and around 125 M1A1 Abrams tank kits. Furthermore, the “Bright Star” routine mutual exercise between the Egyptian and U.S. armies was cancelled. However, the U.S. decided in 2014 to deliver ten Apache helicopters “to help combat terrorism, particularly in the Sinai.”
Before he was elected president and in his capacity as minister of defence, Field Marshal al-Sisi visited Vladimir Putin near Moscow to negotiate a $2 billion arms deal, as well as to canvass support for the upcoming presidential election.
The United States later released the suspended military supplies about two years later, after al-Sisi was elected president and spent many months in office, during which Egypt had begun looking elsewhere for military hardware.
Following the United States suspending military aid, the UK and the EU similarly suspended arms sales to Egypt after the events of the summer of 2013, revoking arms business involving components of military combat vehicles with Egypt. Like the U.S., the UK resumed those sales in 2015.
The EU as a whole suspended a large number of licenses citing that they may be used for domestic oppression of civilian opposition, according to a report by Campaign Against Arms Trade (CAAT). In August of 2013, the EU “suspended 49 existing licenses as well as new license applications for the Egyptian Army, Air Force and Internal Security Forces or Ministry of the Interior until further notice,” but it later allowed some of them to resume provisions.
Egypt continued its indigenous defence programs and in 2017, it increased its military manufacturing capacity by since 2015/2016, which comprised of 20 companies managed by the ministry of defence, which include 17 factories that engage in military and civilian production, a construction company, and a research center. They employ around 34,500 workers.
Recent developments and collaboration
These efforts have produced outstanding results, with Egypt now producing cutting-edge military equipment for its local forces. The Egyptian government’s plan to export Egyptian weapons to African countries in order to further extend Egyptian influence in the continent. In this context, an exhibition of arms and military products was organized in the presence of Egyptian military industries companies in December 2019 with the participation of defense ministers, chiefs of staff and military experts of African countries.
At the time, Yahya al-Kadwani, member of the Defense and National Security Commission in the Egyptian parliament, said, “The state is seeking to achieve self-sufficiency in the field of weapons since it has to import large amounts of weapons to build an army capable of addressing terrorism risks.”
Yahya told the media at the time, “Proposing a self-sufficiency plan to manufacture weapons is part of challenges facing Egypt, especially Turkish threats to build military bases in Libya.”
He noted, “The African market is ready to benefit from Egyptian weapons, as Cairo is interested in being present in Africa politically and through military cooperation. African states need Egyptian weapons because of their good quality and low price and because they suit the nature of African people and Africa’s geography.”
“The parliamentary Defense and National Security Commission is coordinating with the Ministry of Defense and Military Production to draft plans that can hone the skills of the Egyptian army and boost local production of weapons.”
Former Assistant Interior Minister Maj. Gen. Mohamed Nour al-Din told Al-Monitor, “Egypt is in dire need of a plan to manufacture weapons locally, in light of the state policy to develop the capacities of the Egyptian army and supply it with weapons and equipment.”
“The weapons manufactured in Egypt are in line with the needs of the police and army in their operations. The Egyptian armored vehicles suit the desert geography of the areas of operations in the Sinai Peninsula and meet the requirements of the security forces that might not be available in imported weapons.”
Nour al-Din added, “Developing the manufacture of weapons in Egypt will add a source of national income through exports to neighboring countries, be they Arab or African.”
“The plan to manufacture weapons will benefit African countries facing weapons shortages due to the high prices of weapons imported from the West. Egyptian arms will meet their needs and cater to their circumstances, given the African challenges to confront terrorist and extremist groups.”
He said that “funding was [in the past] the main obstacle facing the Egyptian plan to produce weapons. But today the country has a clear political will to direct the required funding to the army and to the production of weapons, especially in light of the internal and external terrorism threat and the neighboring [crises].”
Nour al-Din concluded, “The biggest accomplishment in the plan to develop Egyptian arms was the opening of the Military Factory 300 to produce ammunition. When we trained [armed] forces, we suffered from a lack of ammunition, which limited the scope of training. But local ammunition production will secure large quantities of products and boost the training of forces with the needed ammunition.”
On Feb. 17, Egyptian President Abdel Fattah al-Sisi inaugurated Military Factory 300 operating under Abu Zaabal Company for Specialized Industries, which manufactures multiple small- and medium-caliber weapons ammunition and missiles. Sisi opened a number of other new projects for military production in the military factories of Banha Company for Electronic Industries (Factory 144), Kaha Company for Chemical Industries (Factory 270) and Helwan Machinery and Equipment Company (999 Military Factory).
Al-Sisi also inspected the manufacture of an Egyptian armored vehicle, dubbed the Sinai 200. Assar said in his Feb. 25 statement, “It is a very efficient armored vehicle to meet the needs of the Egyptian army. It is fast and flexible and has a strong network for risk prevention during mission execution.”
In December 2018, Egypt organized the International Defense Exhibition (IDEX), during which the Egyptian armored vehicle, Temsah-3 (Arabic for crocodile) was presented to the participants. The vehicle consists of six seats so the driver, the commander of the vehicle and four soldiers can fit in, making it easier to carry out combing operations and raids.
IDEX 2018 also showcased drones made by the Egyptian army’s Arab Organization for Industrialization, in an attempt to enter the world market for the manufacture of drones, where Turkey occupies an important position.
In December 2018, the Egyptian naval forces announced the first Egyptian naval weapon, the Egyptian Gowind corvette. The Egyptian army stated back then that it aims to strengthen capabilities in achieving maritime security, border protection and economic interests in the Red Sea and Mediterranean.
On Dec. 19, 2019, the Egyptian army released a video of a number of weapons manufactured in the factories affiliated with the Ministry of Defense and Military Production, such as Temsah familiy of armoured vehicles, Fahd-300 APCs, ST-100/ST-500 armoured personnel carriers, and the modified Egyptian 13 mm gun M-46.
On Feb. 19, Assar announced a cooperation agreement with the Senegalese minister of armed forces, Sidiki Kaba, during his visit to Cairo for the supply to Senegal of military equipment, weapons and ammunition.
For the Egyptian economy, the value of the new arms sector remains suspect. Egyptian officials argue that military production will have many technological “spinoffs,” helping Egyptian industry to produce sophisticated consumer durables shortly. It is at least as plausible to argue that labour power and resources which might otherwise be invested in civilian production are being drained away into the military sector.
In 2019, Egypt and South Korean official discussed ways of increasing collaboration on arms industry. The discussion was held during the International Defense Exhibition and Conference (IDEX), United Arab Emirates (UAE) . South Korea’s Defense Minister Jeong Kyeong-doo and Egypt’s Minister for Military Production Mohamed El-Assa pledged to make active efforts to develop a “mutually beneficial” partnership.
The partnership concluded in a $1.7 billion contract for the acquisition of Hanwha’s K9A1 self-propelled howitzer.
This October, Egypt signed an agreement with South Korea for local production of K9A1 Self-propelled Howitzer components. Egypt’s military-owned Arab International Optronics Company signed an agreement with Hanwha Defense Group for the transfer of Technology (TOT), local production of the Automatic Fire Control System (FCS) and other electronic components for the K9A1 Self-propelled Howitzer.
The China Shipbuilding Industry Corporation (CSIC) and the Egyptian Navy also have put in place plans to collaborate on potential defense trade and industrial and technological collaboration, CSIC said on 29 April 2019.
According to a statement by CSIC, the two sides will look to “strengthen co-operation in the field of naval equipment”, adding “CSIC is willing to share the latest technological achievements with the Egyptian Navy and carry out high-level equipment and technical co-operation to contribute to the [development] of the Egyptian Navy.”
Two years ago, in May, Egypt and Belarussia signed a bilateral agreement to jointly design and develop unmanned aerial vehicles (UAVs) in Egypt, the business is worth roughly $1 million.
The contract will see Belarus setting up an enterprise in Egypt to develop, supply UAVs, and train drone pilots, says Chairman of the National Academy of Sciences of Belarus, Vladimir Gusakov.
In June last year, Egypt and American AM General entered a partnership agreement to locally produce the (High Mobility Multi-purpose Wheeled Vehicle) HMMWV tactical vehicle. A Memorandum of Understanding between AM General and the Egyptian Ministry of Military Production (MoMP) will facilitate Egypt’s development of its domestic military automobile industry.
In this new agreement, Egypt will be able to produce locally nearly 70% of the artillery system components within five years, with production beginning in 2023. In February, Egypt signed a $1.7 billion contract with the South Korean Hanwha Defense Group for the procurement and transfer of technology (ToT) of the K9A1 artillery system.
In the same period, the Egyptian Ministry of State for Military Production and French Renault discussed the possibility of co-production of military vehicles in Egypt, as well as future cooperation in other areas.
The meeting took place between Renault representative in Egypt Maged el-Tarzi and Minister of State for Military Production, Mohamed Salah el Din Moustafa.