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New York, NY, United States (AHN) – Wall Street opened lower Friday after a report showed that the U.S. economy expanded less than forecast..

Just after the opening bell, the Dow Jones Industrial Average was lower by 33 points, the Standard and Poor’s 500 Index was flat and the NASDAQ was up by about 6 points.

Weighing on stocks was a report that showed the U.S. economy expanded at 2.8 percent in the fourth quarter, less than the 3 percent that had been projected.

In Europe the Stoxx Europe 600 Index slipped 0.7 percent as investors await word on developments on the region’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.

Despite those words of optimism, the dismal growth of GDP in the U.S. was keeping investors cautious. The health and growth of the U.S. economy is a very important and leading indicator of economic growth worldwide. As analysts like to say, “when the U.S. sneezes, the world catches a cold.”

In corporate news, Ford fell after reporting numbers that missed estimates. Starbucks shares slipped despite reporting better than expected numbers, and Juniper Networks plunged after the second biggest maker of computer networking equipment forecast sales and profits that missed estimates.

In commodities, oil was unchanged at $$99.60 a barrel, gold rose $4.70 to $1,725 a troy ounce and silver was up a few pennies at $33.63.

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Damascus, Syria David Rosenberg (The Medi – As the Arab League agreed to go to the United Nations Security Council early this week with a resolution calling for Syrian President Bashar Al-Assad to step down, Russia was reportedly doing a major arms deal with the beleaguered regime.

The $550 million agreement to sell 36 Yak-130 combat aircraft will not do anything to tip the balance in favor of the Al-Assad regime, which has been engaged in a 10-month conflict with anti-government opposition. But Russia is almost certainly providing arms Damascus needs to hold back the rebels as well as mounting a diplomatic defense of its friend at the U.N.

In a rare glimpse into the Russia-Syria arms trade, a ship loaded with ammunition from Russia was briefly detained in Cyprus earlier this month before continuing its journey unmolested to the Syrian port of Tartus. Foreign Minister Sergey Lavrov has vowed that Russia will veto any sanctions as “unfair and counterproductive.”

“Syria is an important customer for the Russian military industry and the industry is quite keen to maintain the relationship,” Fyodor Lukyanov, editor-in-chief of the Moscow based foreign policy journal Russia in Global Affairs, told The Media Line. “Syria is one of the few remaining customers in the region and it hosts the only military base – a small one but still a base – that Russia still has outside its own borders.”

As the West – now joined by the Arab League – presses the Syrian president ever harder, Russia has emerged as his most important ally. Iran also backs the Damascus regime, but Tehran itself faces growing diplomatic isolation over its nuclear program and doesn’t wield a Security Council veto. China is opposed to Syrian sanctions, too, but analysts say it is likely to follow whatever line Moscow adopts.

Russia’s warm ties with Syria, and more exactly the Al-Assad family regime that has ruled the country four decades, starts with arms sales but it goes much deeper.

In the final two decades of the Cold War era, when the Soviet Union was a superpower competing for global influence with the U.S., Syria was its staunchest ally in the Middle East. Bashar Al-Assad’s father and predecessor Hafez armed his troops with Soviet weapons and advanced Moscow’s interests in the region.

With the collapse of communism and with Syria’s deteriorating economy, the relationship is not what it once was. But Russia maintains a naval base at Tartus and the two governments share a distrust of the West and its motives.

Indeed, the view from Moscow of what is happening in Syria is very different than the one in Washington or Brussels. Where the West sees events in Syria as a popular uprising against a repressive regime, Russia shares Damascus’ take, which sees the rebellion as conspiracy by the Gulf countries to bring down an ally of their foe Iran.

“Saudi Arabia, Qatar and others see this as an opportunity, as a chance to push back Iranian influence,” Lukyanov said. “From Russia’s point of view, it’s part of a geopolitical struggle between Iran and Saudi Arabia, where Syria is just a card.”

For policymakers in Moscow, the situation in Syria looks remarkably similar to the one in Libya last year, where another long-time friend, Muamar Al-Qaddafi, faced what was seen in the West as a popular rebellion against autocracy. Russia reluctantly agreed not to veto a U.N. decision to impose a no-fly zone over the country.

The resolution, as Russia’s leaders understood it, was to prevent Al-Qaddafi from killing civilians with aerial firepower. But the NATO forces that largely enforced the decision, Russians say, used it to level the playing field in the Libyan civil war to Al-Qaddafi’s disadvantage. Moscow lost a friend and customer for its arms and is now out of favor with the successor National Transitional Council.

Zvi Magen, a former Israeli ambassador to Russia, said Russia’s Syria policy is driven by memories of its Cold War rivalry with the U.S.

“There’s an element of business in the arms deals, but it’s mainly a political move to show the flag and to show support for Syria. It’s mainly a function of Russian relations with America than with the Syrian regime,” Magen told The Media Line.

For that reason – and because Moscow realizes that Al-Assad’s days are numbered – it may be prepared to make a deal with the U.S. over Syria, he added.

Nevertheless, analysts agree that the importance of the arms trade as a factor in Moscow’s calculations should not be overlooked. In an economy with few other industrial exports, Russia’s military industry is an important earner of foreign exchange and a powerful domestic political force.

The Voice of Russia radio’s website said in December without citing a source that Russian arms exports reached $11 billion last year, a three-fold increase from 2000. While the country’s biggest customers are India and China, the Middle East had been a growing market until the Arab Spring eliminated Al-Qaddafi and sanctions on Iran removed another customer. Syria alone, according to some estimates, accounted for 7 percent of all Russian arms sales in 2010.

A U.S. government study in 2009 estimated Russia’s share of the Middle East arms market grew to more than 15 percent in the 2005-2008 period, five percentage points more than in 2001-2004 as it offered more creative financing and payment options, counter-trade, offsets, debt-swapping, and, in some cases, licensing production locally.

Russia’s Interfax news agency reported in early December that Russia delivered $300 million of Yakhont anti-ship cruise missiles to Syria.

With numbers like that, it is no wonder that Sergey Chemezov, the head of the state arms export company Rosoboronexport, made clear he had no intention of halting business with Syria.

“There are no sanctions whatsoever regarding Syria,” he told Interfax on Wednesday. “If international sanctions are imposed by the U.N. Security Council, everything will change. And if there are no sanctions, why should we refuse to cooperate with this country? This is business after all.”

Nevertheless, Magen said, Russia is careful not to sell Damascus weapons like S-300 surface-to-air missiles that could alter the regional balance of power.

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Washington, DC, United States (KaiserHealth) – In his State of the Union speech, President Barack Obama made just one explicit mention of the 2010 health law. Here is a transcript of the few parts of his speech that mentioned health care issues:

Innovation also demands basic research. Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched. …

I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny your coverage, or charge women differently than men. …

Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else – like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.

The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors. …

I recognize that people watching tonight have differing views about taxes and debt; energy and health care. But no matter what party they belong to, I bet most Americans are thinking the same thing right about now: Nothing will get done this year, or next year, or maybe even the year after that, because Washington is broken. …

I’m a Democrat. But I believe what Republican Abraham Lincoln believed: That government should do for people only what they cannot do better by themselves, and no more. That’s … That’s why we’re getting rid of regulations that don’t work. That’s why our health care law relies on a reformed private market, not a government program. …

Above all, our freedom endures because of the men and women in uniform who defend it. As they come home, we must serve them as well as they served us. That includes giving them the care and benefits they have earned – which is why we’ve increased annual VA spending every year I’ve been president.

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Indiana Gov. Mitch Daniels delivered the Republican response. Here are excerpts of his remarks:

[We] must unite to save the safety net. Medicare and Social Security have served us well, and that must continue. But after half and three quarters of a century respectively, it’s not surprising that they need some repairs. We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too.

Decades ago, for instance, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. Now, we can’t, so the dollars we have should be devoted to those who need them most.

The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing. Listening to them much longer will mean that these proud programs implode, and take the American economy with them. …

It’s not fair and it’s not true for the President to attack Republicans in Congress as obstacles on these questions. They and they alone have passed bills to reduce borrowing, reform entitlements, and encourage new job creation, only to be shot down time and time again by the President and his Democratic Senate allies.

This year, it falls to Republicans to level with our fellow citizens about this reality: if we fail to act to grow the private sector and save the safety net, nothing else will matter much. …

In word and deed, the President and his allies tell us that we just cannot handle ourselves in this complex, perilous world without their benevolent protection. Left to ourselves, we might pick the wrong health insurance, the wrong mortgage, the wrong school for our kids; why, unless they stop us, we might pick the wrong light bulb!

– Provided by Kaiser Health News.

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United Arab Emirates David Rosenberg (The Medi – Calling the United Arab Emirates (UAE) the world’s “least friendly” place for expatriates-well, those are fighting words. Certainly, they are in a place where non-citizens make up close to 90 percent of the population and are responsible for everything from running the national airline to cleaning up at construction sites.

But a fight is what Forbes magazine and one of its contributing writers, Beth Greenfield, got when they ran a piece putting the Gulf confederation of seven mini-states at the bottom of a list using criteria that hone in on social factors – the ability to befriend natives, fitting into local culture, learning the language and integrating into the community.

The article sparked a furious reaction, a dedicated Twitter hashtag #UAEFriendly and finally, according to local media spin, Forbes “took back” its words and conceded that Greenfield’s list was “non-scientific.” The American magazine also helped smooth ruffled feathers in a posting by Dan Bigman, its managing editor for business news, who called the UAE an “expat paradise.”

Giving advice to the businesspeople, diplomats and others living abroad is a big and important business. What with varying costs of living, standards of schools and housing, and the risk that today’s sleepy posting erupts into revolutionary cauldron, employees and employers alike need a way to compare and decide how much hardship pay one location deserves over another.

One of those measures is published by the expatriate financial-services unit of the British-based bank HSBC, and that was the starting-off point for the controversy.

The Expat Explorer Survey for 2011 survey ranks 31 countries for expat conditions based on a survey of 3,385 people in 100 countries taken last May-July (only 31 countries had enough respondents to make the sampling valid, HSBC says).

Weighing all the criteria HSBC uses – a long list of factors ranging from “nicer/bigger property” to children “spending less time playing video games” – the UAE ranked a respectable third. Last November, Mercer, a British firm that advises companies on compensation for their employees living abroad, ranked Dubai 74 and Abu Dhabi 78.

But Greenfield, citing the views of expat “coach” Heather Markel, isolated four factors from the HSBC survey she said make a place “friendly” for foreigners living and working there.

Suddenly, the UAE plummeted to the bottom of the list, along with much of the rest of the Gulf and India. Greenfield did not dwell much on the UAE’s misfortune: She made only two references to it and one of them refers to its attractions for expats as a place where people enjoy high incomes and good career prospects. Nevertheless, it didn’t take long to elicit a spirited defense of the UAE.

“Dear Forbes, Did you ever visited UAE?” asked AhmadTheFrozen. “We don’t realize how realize how friendly UAE is until we visit Europe,” commented Talib Al Hashimi. “I’ve developed a fantastic social circle and career in UAE. Who did Forbes survey? Not me!” said Brendan Ryan.

Tamim Al Kuttab asked: “If the UAE is unfriendly to expats — as Forbes says — then why are they staging their Global CEO Conference in Dubai in October?” (Good question: The Forbes Foundation, which publishes the magazine, is holding its 12th annual Global CEO Conference in the UAE’s Dubai next October.)

Annabel Kantaria. a journalist based in Dubai, wrote in a blog post for Britain’s Telegraph newspaper that if foreigners find the Emirates an unfriendly place, they have only themselves to blame.

“Is it the fault of the host country if the expats don’t have success learning the local language? Is it the fault of the host country if the expats fail to integrate themselves into the community, don’t manage to befriend locals or don’t find it easy to fit in?” she wrote. “Does that make the host country ‘unfriendly’? Or does it make the expat ‘inadaptable’? On whom does the onus lie?”

Greenfield herself did not respond at length to the complaints on the Forbes website, but a spokesman for the magazine speaking to The National downplayed the affair. “Given the UAE’s reputation as a crossroads for world commerce and culture, we were surprised by the results of HSBC’s survey,” an unnamed spokesman said in the local English-language daily. “The data is [sic], of course, non-scientific and intended only to spur discussion.”

Bigman, without making any apology, called the UAE – as well as Singapore and Hong Kong, two other tiny expat-heavy places – an “expat paradise,” friendlier to resident foreigners than his home country of America.

In fact, Khalid Al-Ameri, an Emirati, pointed out in an op-ed in The National the natives may not seem friendly because it is so hard to find one among the masses of foreigners.

Of the 8.26 million people living in the UAE in 2012, 7.31 million of them are expats, according to the National Bureau of Statistics. When the economy was booming before 2008, the expat population was even bigger, but even today, just one in 12 people are Emiratis and in expat-rich places like Dubai the ratio is even bigger.

“Because of the skewed demographics (about 10 percent of the population is Emirati), getting to know the ‘locals’ can be a tough task for any new expatriate. And in any country within a matter of days, an expatriate will find his or her countrymen, the familiar cuisine and hangout spot,” he wrote. “It is very easy for an expatriate to quickly fall into a comfort zone and go quite a while without actually interacting with an Emirati on a personal level.”

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DC, Washington, United States (AHN) – The U.S. Conference of Mayors wrapped up its winter meeting Friday in Washington, D.C., with Chicago Mayor Rahm Emanuel stepping into controversies on same sex marriage and education.

Emanuel joined about 80 other mayors from across the nation in endorsing laws to give legal recognition to same sex marriage, along with the tax breaks and other benefits spouses can share.

The mayors signed on to a statement that said, “Our cities derive great strength from their diversity and gay and lesbian families are a crucial part. Studies have shown what we know through our hands-on experience that cities that celebrate and cultivate diversity are the places where creativity and ideas thrive.”

Emanuel supported the Illinois Legislature’s effort last year to legalize civil unions for same-sex couples.

He said New York did “a good thing” last June when state lawmakers legalized gay marriage.

In separate comments Friday, Emanuel discussed his plan to turn Chicago’s community colleges into training institutions for the city’s employers.

Currently, Chicago’s City Colleges have a graduation rate of about 7 percent and job prospects for graduates that are “not as high,” Emanuel said.

His plan calls for each of the city’s seven community colleges to operate with specialties, such as health care, transportation, hospitality and manufacturing.

In addition, employers would be brought in to develop curricula that would train the students to become their employees.

“I want it to have economic value” to attend college, Emanuel said at the downtown Washington hotel where about 250 mayors were meeting.

Turning colleges into job training institutions is controversial among some academics, who say a well-rounded education requires liberal arts courses that include literature, history and the arts.

Nevertheless, job creation and recovery from the economic disaster of the Great Recession were dominant themes throughout the meeting this week.

The U.S. Conference of Mayors released a report that said the nation’s metropolitan areas will struggle for five more years to regain jobs lost during the recession that started in September 2008.

“The recovery is very uneven across U.S. regions, with the southeastern and southwestern metro [areas that] were the most affected by the housing bubble looking ahead to years of recovery,” the report says.

U.S. nonfarm payrolls will grow about 1.3 percent this year, which is unlikely to reduce the unemployment rate below 8 percent, according to a report by IHS Global Insight.

The report predicts the nation will regain nearly half the jobs lost during the Great Recession by the end of 2012.

The mayors used the economic report to try to prod Congress to approve legislation that would create more jobs.

Los Angeles Mayor Antonio Villaraigosa, president of the Conference of Mayors, said “Congress has jumped ship” in its obligation to stimulate the economy and employment.

However, Villaraigosa acknowledged cities will have a hard time squeezing money out of Congress at a time the federal government is trying to reduce its deficit by cutting spending.

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Baghdad, Iraq (IRIN) – Suicide attacks, assassinations and bombings in Iraq have claimed the lives of at least 265 people and injured hundreds of others since 18 December, the date the USA withdrew all but 200 of its troops from the country, according to the health and interior ministries.

The wave of attacks, carried out mainly by Sunni extremists from Al-Qaeda in Iraq against Shia communities, has alarmed many who fear the country could descend into chaos once more, with the government itself acknowledging it is not capable of ensuring security on its own.

The attacks also come as political factions are at loggerheads over how to reach a power-sharing deal. The Sunni community is complaining that it is being marginalized by the Shia-led government, which recently issued arrest warrants against Sunni Vice-President Tariq al-Hashemi and other politicians for allegedly operating death squads.

Many fear the current violence could send the country back to the days of 2006-07 when Shia-Sunni conflict left thousands of people dead and millions of others displaced. A few families have already packed their bags and others are contemplating leaving.

Here is how some Iraqis are feeling:

Sultan Abdul-Latif Ibrahim, a 55-year-old father of six from the Shia Shabak minority in the northern province of Ninevah: “I lost 10 of my relatives since [the US-led invasion in] 2003… We used to live in the provincial capital, Mosul, for years with Sunnis and Christians. But in 2007 we were forced out of our houses by Sunni extremists who blew up our homes. Since then, we have been living in a makeshift camp on the outskirts of Mosul. Last Monday [16 January] our camp was attacked by a parked car bomb, killing eight people, including six of my relatives. I wish to die now rather than later. We can’t bear the hardships we are going through every day. We, the Shia, are facing constant threats by Sunni extremists who want to eliminate us and there is no place to go. I can’t afford to move with my family to another place.”

Hassan Abdul-Mahdi, a 35-year-old Sunni businessman and father of three from Baghdad: “Iraq today is just like Iraq after the toppling of the previous regime. There is one group that wants to dominate and impose its control on the country. Today, the Shia-led government and politicians who control the security forces have started to hunt down Sunni leaders and political figures to bite them one by one using different means… I’m contemplating leaving Iraq as the situation seems to be getting worse.”

Jandak Youssif, a 46-year-old Christian from Baghdad: “The situation is getting worse day by day, and the government doesn’t care about our suffering and needs. Our economy is stagnant; illiteracy and unemployment are prevalent; decent public services are not available; and people are leaving the country due to the security situation and religious discrimination. Christians are being attacked and no-one is campaigning for their rights. We are not seeing any improvement in any aspect of our life… My family is scattered in many parts of the world; my parents and brother are stuck in Syria waiting to be relocated to a third country. I have three sisters in Denmark, one in the Netherlands and two in Ninevah Province. Iraq is one of the richest countries in the world but we are the worst in terms of corruption, unemployment and illiteracy.”

Examples of recent violence

16 January: Two car bombs targeted a camp for displaced Shabak in the northern province of Ninevah and a commercial area in the central province of Babil, killing 11 and wounding 21.

14 January: A bomb attack against Shia pilgrims in the southern province of Basra killed 53 and injured 130. Al-Qaeda in Iraq claimed responsibility for the attack.

10 January: A wave of bombs and assassinations nationwide killed 10 people. The targets were government officials, security forces and Shia pilgrims.

9 January: Three car bombs exploded in Baghdad, killing 17 and wounding dozens.

5 January: A wave of bombings targeted Shia Muslims in Baghdad and other provinces heading on foot to the revered city of Karbala to mark the anniversary of the death of Imam Hussein. Seventy-eight people were killed and more than 100 wounded.

22 December: A string of coordinated bombs tore through mainly Shia neighborhoods in Baghdad, killing 69 and injuring nearly 200. Al-Qaeda in Iraq claimed responsibility for the attacks.

18 December: The USA pulled the last of its combat forces out of Iraq, leaving only 200 for training and diplomatic protection.

sm/ha/cb

– Provided by Integrated Regional Information Networks.

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Berlin, Germany (AHN) – The German government cut its forecast for economic output in 2012 to 0.7 percent from its October estimate of 1.0 percent, while predicting growth of 1.6 percent for 2013.

Despite the slower growth forecast, Economy Minister Philipp Roesler said that he did not see a recession ahead for the nation. Roesler insisted that Germany would remain an “anchor for stability and growth in Europe.”

Export-driven Germany is Europe’s top economy, but it hasn’t been immune from the effects of the ongoing eurozone crisis or from weaker demand for its exports from emerging markets.

Roesler said the economy probably shrank by 0.3 percent in the last quarter of 2011, but he expects growth of 0.1 percent in the first quarter of this year.

That moderate growth would save Germany from officially sliding into recession, which is defined as two consecutive quarters of negative growth.

Roesler said that the earlier projections had been based on a quick solution to the eurozone debt crisis and relaxed market tensions, neither of which happened.

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Beijing, China (AHN) – China’s economic growth slowed to 8.9 percent in the fourth quarter of 2011, according to the nation’s statistics bureau.

That was China’s slowest pace in more than two years.

It was down from 9.1 percent in the previous quarter.

The world’s second-largest economy grew by 9.2 percent during the entire year, down from 10.3 percent in 2010.

Forecasts by analysts call for China’s economy to slow further during 2012, in part because of monetary tightening by the government.

China has been one of the world’s fastest growing economies in recent years as its manufacturing and export bases grew, increasing jobs and incomes in the nation.

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Cairo, Egypt Joseph Mayton / The Media – Mahmoud Yussif runs a mobile phone shop here in the Egyptian capital. He fields customers in rapid-fire succession explaining his products thoroughly, answering questions quickly and efficiently, and locating in seconds a cellphone or anything else in his small but crowded shop.

Started five years ago, it’s a prosperous business but a very small one. Yet even a tiny store like Yussif’s isn’t beyond the long business arm of Egypt’s army. The owner of the space that he rents is a general, who has also his creditor, and between those two roles takes a big chunk of the store’s profits.

“I don’t own the shop itself,” Yussif told The Media Line as the afternoon rush hour frenzy of customers comes to an end. “The owner of the space, who really just gave me a loan, takes 20 percent of my earnings every month.”

The unnamed general dabbles in real estate and lending as a private sideline. But it illustrates the extent to which Egypt’s army is engaged in business as the owner and operator of a vast empire of factories, tourist resorts and real estate developments.

No one knows the extent of the Egyptian military’s economic holdings because successive authoritarian regimes have made sure it was kept secret. But since the military came to power in Egypt as the Supreme Council of the Armed Forces (SCAF) almost a year ago after a popular uprising ousted President Husni Mubarak, the armed forces’ role in business has come under increased scrutiny.

For people like Yussif, the grip of the army-dominated economy’s invisible hand has also become tighter.

“They haven’t let me sell any Sim cards without their first being registered, which has hurt business because the ones from former clients were cheaper. I get calls weekly to know how my shop is going,” he says.

Concrete information on the extent and holdings of the army’s business operations is difficult to come by. The armed forces are secretive but have portrayed themselves and the government generally as poor and hemorrhaging money. In the case of the government, that is certainly the case, but in the case of the army that is less evident.

In one of the most unusual intra-government transactions of the year, the military loaned the central bank $1 billion to help support the sagging Egyptian pound last month. The transaction not only pointed up the relative wealth of the two institutions but also the extent to which the army has access to money beyond the reach of the civilian authorities to whom it is supposed to be reporting.

Amr Hamzawy, a political analyst and newly elected member of parliament, estimates that the military controls as much as a third of Egypt’s economy. Paul Sullivan, a U.S. National Defense University professor and expert on Egypt’s military, told Time magazine last year that the military accounts for some 10 percent to 15 percent of the economy.

Mohamed Kadry Said, a retired general and a military analyst for the Al-Ahram Center for Political and Strategic Studies in Cairo, puts the figure at 8 percent of gross domestic product, a seemingly small percentage but, in Egypt’s $180 billion economy, one that puts the annual turnover of Egyptian Army Inc. at more than $14 billion.

As Egypt moves on its rocky road toward democracy, observers say the army’s efforts to preserve its business interests are likely to be a major barrier. More democracy will almost certainly entail more accountability and perhaps a direct assault by the country’s civilian politicians and economic reformers on the military’s economic power and privileges.

Many doubt that the generals will relinquish power so quickly. Among those is Mohamed ElBaradei. who announced over the weekend that he had dropped out of the presidential race, saying he saw no hope that the election due by the end of June would bring a real end to the military’s rule.

“They use their businesses to maintain their power now more than ever. They own restaurants and tourism companies, so for the leadership today, stability and crushing the opposition to their rule is paramount to maintaining their wealth,” Ahmed, a former general who asked that his name not be used, told The Media Line.

Army-owned factories first sprang up in the 1820s to produce uniforms and small arms as Muhammad Ali, the founder of modern Egypt, sought to transplant Western technology to the country. The army’s role expanded when Gamal Abdul-Nasser created a state-dominated economy in the 1950s and 1960s.

The military’s businesses enjoyed another spurt of growth after the 1979 peace treaty with Israel led to a smaller army and the need to find jobs for demobilized soldiers. In 2008, as bread riots exploded across the country, the government ordered the giant network of army bakeries to supply hungry consumers.

The military in Egypt “has a long history of running business, and they are stronger economically than any other institution in the country,” the former general says. “Don’t be fooled by their power, it is now political and economic and they like it this way.”

The reach of the military’s wealth and influence over business extends beyond its formal holdings to a vast cadre of retired officers who move into influential positions in government and companies. “Retirement here in Egypt from the military is never final,” the retired general says.

According to Jane’s, the Egyptian military’s budget is some $5 billion annually, supplemented by $1.3 billion of American financial aid – far more than the country receive in economic assistance — as well as more in the form of budgets for joint training and excess military hardware. But Ahmed says the army’s spending is probably higher, thanks to revenues gleaned from its far-flung business.

“It’s a fine line between what is legal and what is not, because there are no laws here that prevent the government, the military and others from owning and running businesses at the same time,” the former general says.

As an institution, the armed forces own and run much of the food industry, including plants manufacturing olive oil, milk. bread and bottled water – all of which are subsidized by the very government they are in charge of.

They also run a number of cement factories, gas stations and refineries, clothing and kitchen facilities, vehicle production – one local newspaper reported the military is in partnership with Jeep to produce Cherokees and Wranglers – as well as resorts and hotels.

Since February last year, the role of the military and business has become more visible and controversial. All these industries, says economic analyst Gamal Abdel-Salam of CS Securities in Cairo, lead to a conflict of interest.

“The military runs all these companies, factories and tourist destination spots, and now is in charge of the government, so it means they are giving money out and supporting industry that in essence they are already in charge of,” he says.

Topping it off, military businesses are free from government oversight and are not required to pay taxes, which Abdel-Salam says means that as the government gets poorer, “the military and its leaders are getting wealthier, so why would they want to leave power if they are winning on all sides?”

Abdel-Salam contends that the generals “see an opportunity to push forward without fear of government oversight, because they are the oversight and that is why they are silent on their role in the economy.”

Yussif, the shopkeeper, says he sees the military controlling all aspects of society, from political to the everyday functioning of businesses with a tighter grip than the former Mubarak regime.

“At least before there were places that they couldn’t get to and didn’t control, but now, if you argue or fight for your rights, they can arrest you and charge you with crimes against the government,” he says. “I don’t like it. My friends don’t like it.”

He recounts the story of a fellow shop owner who was sent to jail because he refused to continue paying the officer a share of the profits. “It had been 10 years and their contract was supposed to be finished,” says Yussif. “It’s a tough time we live in.”

Overcoming wealth and power in Egypt may be difficult to achieve, even if a new constitution – which the military wants to ensure contains no oversight over its budget and income – is established in the next few months. Indeed, for the former general the revolution that toppled Mubarak is starting to look like the one that toppled King Farouk in 1952 and inaugurated nearly six decades of military rule.

“What we are seeing,” he says, “is Egypt’s military taking a very Soviet-style approach to things and one we have seen before, in the 1950s with Nasser and look how that turned out for the country.”

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