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01 Jul 11. Research and Markets
announced the addition of the “Egypt Defence and Security Report Q3 2011” report to their offering. Egypt is undergoing dramatic political change, with ex-President Mubarak being ousted by millions of protesters and replaced by a transitional military government: the Supreme Military Council. Preparations are being made for the move to democracy, with political parties being formed and the country’s constitution being rewritten. A presidential election is expected in late 2011, though timetables are still under discussion. Overall, Egypt is facing its most uncertain period since 1952, when military officers overthrew the monarchy and installed Gamal Abdel Nasser as the country’s dominant political figure. Although Mubarak and his government have now resigned and the ousted president put under house arrest, his assets frozen pending investigation, the pro-democracy protests and strikes continue. Further protest activity should be expected over the coming months, although demonstrations will increasingly focus on economic, rather than political grievances. A constitutional committee was formed and is preparing a raft of amendments for referendum. BMI believes that the most likely direction for the newly emerging Egypt to take would be to avoid a decisive break with the West and instead adopt a multi-vector foreign policy that would distance it somewhat from the US and Israel, while pursuing warmer relations with Iran, Turkey, Russia and China. Main Defense Spending & Procurement Trends: Thus far, the main trends in terms of defence spending and procurement remain intact. While the military is likely to remain a key player in whatever polity ultimately emerges in Egypt, it will have the ability, the willpower (and, perhaps, given multiple security threats, the need) for defence spending to remain high. BMI has already revised its forecast of economic growth for this year down to 3.2%. In the event that Egypt slips into recession, the defence spending ratio will likely increase. The long-standing and large scale procurement program (which is substantially, but not entirely, funded through the US’ Foreign Military Financing (FMF) program appears set to continue. Big ticket purchases announced since the beginning of 2010 include 24 more F-16 aircraft and four fast patrol boats. As of April 2011, the governments of France and Germany had suspended sales of arms to Egypt in the wake of the recent unrest. However, the US and UK governments have