Every autocrat must navigate threats from both within the regime and among broader society to maintain power. Insider challenges, such as elite defection and military dissent, can be just as dangerous as outsider threats from mass protests and opposition parties. Egyptian President Abdel Fattah el-Sisi, who rose to power via an internal coup, has carefully managed insider risks, consolidating control over key institutions and neutralizing potential rivals. However, his economic policies have failed to address public discontent, fuelling widespread frustration. A decade of austerity reforms with insufficient social protection has left many Egyptians struggling to make ends meet under an increasingly repressive government. As global economic turmoil in the wake of US tariffs looms, the outsider threat to Sisi’s rule is growing. If Egypt’s foreign donors wish to mitigate the risk of unrest, they must increase pressure on Sisi to pursue meaningful reforms that support the welfare of Egyptians.
Managing insider threats
Sisi is acutely aware of the dangers posed by insiders. As Minister of Defence and Commander-in-Chief of the Armed Forces, he orchestrated the 2013 coup that ended Egypt’s brief experiment with democratic Islamist rule. His defection from Mohammad Morsi’s government is a classic example of how internal dissent can topple authoritarian regimes, with members of the ruling elite turning against the leader to precipitate regime change.
Since taking power, Sisi has taken great care to consolidate key centres of power in Egypt to avoid a similar fate. By granting the military unprecedented economic privileges, he has ensured that army elites remain financially dependent on, and invested in, his continued rule. Recent cabinet reshuffles also appear designed to prevent any single figure from amassing enough power to pose a challenge to Sisi’s rule. Some speculate that the reassignment of Sisi’s former closest aide, spy chief Abbas Kamel, last October was a strategic move to limit the concentration of power within the security apparatus.
At the same time, Sisi has reshaped Egypt’s economy to overwhelmingly favour elites, particularly within the military. Military-owned firms have flourished under his leadership, producing everything from pasta and bottled water to cement and pharmaceuticals. While the IMF has urged Egypt to scale back the military’s role in the economy and privatize its holdings, the government has yet to comply, and seems unlikely to do so. IMF officials privately acknowledge that any reform affecting military interests is a red line for the regime
Economically, Sisi’s resistance is costly. Years of military dominance have stifled private investment, slowed growth, and deepened Egypt’s reliance on foreign bailouts. Politically, however, the strategy is logical. The military remains Sisi’s most crucial pillar of support. By ensuring it remains invested in his presidency, he reinforces the stability of his rule.
Neglecting the outsider threat
While Sisi’s approach to managing insider threats has been effective for regime survival, his handling of the outsider threat is far more precarious. Successive devaluations to the pound since 2016 have slashed Egyptians’ purchasing power, leaving many poorer and hungrier. By 2021, nearly 70% of Egyptians reported experiencing food insecurity, a crisis worsened by deep cuts to the food subsidy system. In 2019, the government cut nearly 6 million beneficiaries from the food ration card system and 11 million beneficiaries from the bread subsidy system. In 2024, it went even further, slashing bread subsidies – a historically untouchable policy – and raising prices for a key staple in the diet of 70 million Egyptians. With summer approaching, the prospect of widespread electricity blackouts amid sweltering heat looms yet again. These worsening conditions have fuelled public frustration.
While Egypt’s fiscal space is constrained, claims that it cannot afford to expand social protection ignore how resources are allocated. Military spending and megaprojects like the new administrative capital continue to consume vast sums of public money. Reallocating even a portion of this spending could ease the social burden of reform and stave off the risk of mass unrest. In this sense, massive cuts to Egypt’s welfare system are not inevitable; they are a political choice that prioritizes elite interests over public welfare.
The limits of repression
To contain opposition, Sisi has relied on expanding repression. Since 2013, the state has intensified mass arrests, enforced disappearances, and harsh crackdowns on dissent. Repression has expanded beyond Islamists to include secular activists, journalists, and academics. The regime has tightened control over media, blocked hundreds of websites, and passed laws criminalizing protests and independent political activity. In recent years, even mild critics, including social media influencers and human rights lawyers, have been targeted.
While repression has effectively suppressed large-scale protests, discontent over Sisi’s economic policies is growing, particularly as austerity measures, inflation, and inequality take their toll. In early 2024, four individuals were arrested for posting criticisms online of the government’s handling of the economic crisis. That March, security forces responded to a protest in al-Dakhilah, Alexandria governorate, where demonstrators held up signs that read “You made us hungry, Sisi.” In such a highly repressive environment, even small acts of defiance hint at deeper discontent.
Over time, economic grievances could erode the legitimacy of Sisi’s rule, and repression alone may not be enough to contain mounting discontent. For now, he has weathered more than a decade of unpopular reforms, and his grip on power appears firm. But, as neighbouring countries can attest, a regime is stable until it is not – a reality underscored by the sudden fall of Bashar al-Assad in late 2024, which quickly raised speculation about whether Egypt could be next. Sensing danger, Sisi struck a defensive tone, declaring: “My hands are not stained with anyone’s blood, nor have I stolen anyone’s money.” While he evidently recognizes the fragility of his position, Sisi has shown little interest in addressing the root causes of Egypt’s crisis.
International financial institutions and authoritarian stability
The Arab Spring was a reminder that the signs of regime instability are often difficult to detect. Egypt still retains many of the features classically thought to ensure stability: robust regional support, a powerful and loyal security apparatus, and relatively low levels of popular mobilization. Yet declining government revenues could threaten its ability to maintain control. For the time being, Egypt’s fiscal position remains stable due to significant financial support from the IMF and the Gulf states.
However, it remains unclear whether donors will continue propping up Egypt without structural reforms. The IMF has consistently urged Egypt to divest the military from the economy and create a level playing field, to little or no effect. The Gulf countries, while still interested in investing to ensure Egypt’s stability, are increasingly focused on projects that offer financial returns. High inflation, geopolitical uncertainties, and high debt could render Egypt a less reliable investment destination. Further, as oil prices fall, Gulf support may diminish. While favoured by the government, Gulf investment has largely reinforced the governance failures underpinning Egypt’s long-term fragility because it provides the regime with the resources to delay structural reforms to the economy.
Beyond economic restructuring, efforts to promote broader governance reforms have also faltered. Western multilateral donors have done little to push Egypt towards expanding social protections or curbing repression. The IMF has nominally tied recent loans to social welfare measures, requiring in 2022 that Egypt allocate a portion of its subsidy reform savings to social protection. However, critics argue that the Fund’s spending floors are inadequate and inconsistently enforced. Similarly, the European Commission has linked disbursements from its €7.4 billion deal with Egypt to progress on democracy, human rights and the rule of law. Yet a recent €1 billion disbursement was justified by what the Commission described as “concrete and credible steps” towards reform – a characterization Egyptian activists dismissed as deliberately misleading, accusing the Commission of turning a blind eye to persistent repression.
Conditionality need not take the form of abrupt aid withdrawal. External backers can tighten enforcement by linking aid tranches to concrete, measurable progress on social protection and economic reform. This includes more rigorous monitoring, greater transparency, and public disclosure of Egypt’s compliance with reform benchmarks.
The role of the international community
More concerned with stemming migration than promoting meaningful reform, the international community has largely opted to funnel funds into Egypt without demanding accountability. Sisi, for his part, has successfully leveraged fears of collapse and renewed refugee flows to secure support while resisting pressure for reform. But if long-term stability is the goal, donors must confront the growing risks posed by economic hardship and repression. Failure to push for genuine improvements in governance and social protections not only entrenches authoritarianism but also heightens the risk of future unrest with potentially far-reaching consequences.
International financial institutions, in particular, face a difficult balancing act. Political stability promotes macroeconomic stability, the IMF’s core mandate. In the short term, acquiescing to authoritarian rule may seem like a necessary trade-off. However, over time it sows the seeds of instability, as popular resentment simmers beneath the surface. While international organizations cannot, and should not, pursue regime change, they must remain principled: enforcing conditions when necessary and refusing to reward regimes that deepen economic and political crises. In Egypt’s case, this means recognizing that repression is not a substitute for reform, and that sustainable economic recovery is impossible without good governance.
This is also in the interest of Egypt’s backers. By prioritizing short-term regime stability over reform and providing unconditional support, donors risk entrenching the very conditions that fuel long-term fragility. The international community, through its provision of economic support, can and should do more to hold the Egyptian government accountable for reforms, including promoting meaningful improvements in governance and in Egyptians’ quality of life.
