NATIONAL INTELLIGENCE ESTIMATE
PROBABLE DEVELOPMENTS IN EGYPT
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PROBABLE DEVELOPMENTS IN EGYPT
^aJor importance tosecurity interests because Western access to its territory in time of war is essential for effective defense of theEast and because of the influence which developments in Egypt are likely to have on the other Arab states.
Egypt is now controlled by ajunta, the Revolutionary Command Council, which hasrogram of internal reform and is currentlyto secure Egypt's foreign policy objectives through negotiation with, rather than defiance of, the West
the present regime haspolitical weaknesses and willdifficulties, it appears capablewith all purely domesticto arise during the nextBarring unpredictablesuch as assassination, itspossibly most decisive test is likelyin the field of foreign policy,in connection with thewith the Westevacuation of the Suez baserole in Middle East defense.
uccessful outcome of thesecannot be predicted, particularly If the Egyptians continue to insist on complete British evacuation beforethe defense arrangement which they will accept thereafter. Difficulties will almost certainly be created by hard bargaining tactics by both the British and the Egyptians, and by the manyissues which must still be
f the negotiations broke downrolonged stalemate ensued, the present government would probably seek to cover the failure of its foreign policy byan anti-Western attitude. Faced with internal dissension, increasingand possible overthrow, thewould probably seek arms and increased trade from the Soviet bloc and at least acquiesceenewal ofwarfare against the BritishAny successor regime wouldbe more extremist and anti-Western. Serious disorders would lead the British to consider military occupation of other parts of Egypt.
The achievement of an agreement with the West satisfactory to Egypt would greatly strengthen the position of the present Egyptian regime. Itsprestige would be increased and it would obtain the means fortart toward improving its military and economic position.
Egypt would remain, however, aunstable country. Even withaid. the regime would be faced with difficult problems of management and
social adjustment in carrying out itsreform program. Egypt'sfortunes would continue to be largely determined by the fluctuations of the world cotton market. Finally the regime would remain burdened with the long-range problem of coping with heavy population pressure and emergingaspirationsand of limitedfor increasing output.
he achievementefensesettlement with Egypt along the lines now contemplated by the US and UK would provide the West withcommitments regarding the Suez base area. It would also provide the West with an opportunity to secure closer cooperation from the other Arab states. Important sources of friction wouldhowever, notably Anglo-Egyptian suspicions and Arab-Israeli tensions
9 Egypt is of major importance to Western security interests. The Suez Canal lieswithin Egyptian territory. The Suez Canal area contains the largest and best located military base in the Middle East, and its communications facilities and laborare the best in the region. Western access to Egyptian territory in time of war is considered essential for effective defense of the Middle East. Moreover, because Egypt is the most advanced and Influential of the Arab states, developments In Egypt will have considerable effect on the attitude of the other states of the Middle East toward the West, on Arab-Israeli relations, and oninfluence in the area.
he Revolutionary Command Councilunder the chairmanship of GeneralNagib has complete control over the Egyptian Government. Since overthrowing King Farouk inhe RCC has put an end to parliamentary government3 Constitution and abolishing all political parties, and has destroyed ormajor opposition groups. General Nagib ls Prime Minister and has assumed extraordinary powers for three years. The RCC not only has control over thethe ability to maintain public order, but it currently enjoys widespread public support for its domestic and foreign policies.
IL The members of the RCC regardas revolutionary reformers; they are committedold program aimed atsweeping Internal reforms, at gaining and exercising full Egyptian sovereignty, and al strengthening Egypt economically andBreaking with the precedent of the governments that preceded it, the RCCIts regime with an energeticon corruption and inefficiencyhange of approach In the field of foreign policy which hasew andopportunity for the negotiation ofIssues with the UK.
BASIC CONCERNS OF GOVERNMENT IN EGYPT
By decree, supreme sovereignty isby Nagib ln conjunction with the RCC, which reportedly follows the principleouncil of Ministers, which ls appointed by and may be dismissed by the RCC, sits with the RCC to pass on the general policy of the state The RCC hasumber of competent civilian leaders In high posts and of the rank anC-We of civil servants.
Since corning to power the RCC has ruled with Increasing effectiveness and has dls-
played great shrewdness in dealing with existing political organizations andpolitical personalities. It hasand implemented extensive reforms, which have always been contrivedanner which has attracted more support than opposition andense of active concern for the nation or some large element within it. The RCC has been able to achieve this politicalpite of the handicap of inexperience, because itshas appealed to tbe important middle sector of Egyptian society, made up ofgovernment workers, professional classes, and small businessmen. Theof the RCC are themselves members of that social group, were educated Inwhere Its emerging ideals predominated, and accept the principles and objectives of Egyptian nationalism. The RCC has won the support of the members of the middle sector of Egyptian society because itsgives expression to their aspirations for independence and reform and gives hope for the achievement of these long-cherished goals.
he RCC Is apparently aware of theof catering to the urge of thesector to engage in political activity and so far has managed to keep it satisfied and loyal, without sacrificing its own power. Over the long run, however, the RCC will have to provide other means for this middle group toense of participation in political life, or run the risk of dangerous opposition from the moat politically conscious and Influential members of Egyptian society. It Is currently attempting to do this through the medium of the new official "Liberation Organization" which Is designed toew center around which political support for the new regime can be organized The RCC has placed great emphasis upon Its reformist aspirations, but it has shown increasingabout unorthodox schemes for solving the country's problems, however greatpolitical value they might have.eriod of crisis, however, inexperience and zeal to win wider popular support might lead the RCC to attempt sweeping programsthe capability of the government.
A potential source of weakness in the RCC is its reported division Into two factions on questions of principle and tactics. One group, which includes General Nagib and which has dominated the RCC fromolicy of moderateand currently advocates anto secure benefits for Egypt through bargaining with theecond group is said to lean more toward extreme nationalismactic of toughness and militancy. Divisions within the RCC are likely toif the regime fails to make progress, thus decreasing the effectiveness of the
There exist several opposition groups which might participate in amovement. These include theof the monarchy, the upper-classwho formerly dominated Parliament, the Wafd Party, and Army groups associated with the former High Command or opposed to the Army's new political role. All these groups have been weakened or neutralized by the present government, but they would gam strength if the government suffered serious reverses or failed to make progress, or Ifconflicts developed within the RCC itself. Even the groups now supporting the RCC, particularly the Moslem Brethren, might turn against it under certain circumstances.
The small and factional Communist movement in Egypt ls not likely toerious threat as long as the present regime makes progress toward its announced goals. The RCC government will continue toCommunism and apparently has the means to control Communist-inspiredIn Egypt. While these circumstances prevail. Communists are unlikely to make progress toward infiltrating the armed forces or the civil agencies of the government. Communists in Egypt will probablyon anti-Western propaganda themes such asnd US support of Israel, particularly while negotiations with the West continue. If. however, the govern-
policy of bargaining with the West should end in stalemate the Communists would enjoy an increasedconomic deterioration andof projected economic and social reforms produced widespread dissatisfaction,Influence with students, labor, andwould be greatly increased In the event of the serious weakening of the government's position in Egypt, the Communists couldto the general instability byone or more of the opposition groups now infiltratedimited extent.
When it came to power in Egypt, the RCC was keenly aware that much of thewith the former regime stemmed from its corruption and from its failure to deal effectively with the country's growingproblems. It took early and strong action against the governmental corruption and inefficiency which had had an adverse effect on the economy. The many royal favorites were removed from positions of power and political parties were required to disown and expel corrupt elements. Ita sweeping land reform program and took steps to meet the immediatecotton crisis.
Theand reform program asthough less ambitious than the one originally announced, remains its mostdomestic Innovationrincipal reason for its reputationhampion of reform. Under present plans, thewill in the next five years take over that portion of Individual holdings which is In excesscres for redistribution to landless peasants in two to five acre plots. In addition, the government la institutingchanges which may have an even more pronounced effect on Egyptian agriculture, amongestatement of peasant rightsis their landlords, provision forfixing of agricultural wages, andmembership In agriculturalby all holders of five acres or less. The land redistribution program will involve about one-tenth of the land now underless what the larger landholders give lo their relatives or sell to others, as permitted by the law, before the government moves in. The program is set up on self-liquidating lines: the government will pay off the large landowners In government bonds and In turn is to be paid back by the newhirty-year period.
be program has thus farajor political asset to the regime; its popularity among the peasantry and the middle groups has more than outweighed the adverse effect on the already hostile landlord class.the political value of the program may decline as it is earned out. Presentof the program may become disillusioned as it becomes apparent thatmall fraction of the millions ofamilieswill obtain plots of their own Even if the program is quickly and efficiently implemented, rural living standards will not necessarily Improve. Unemployment among hired farm laborers may increase, and production may actually decreaseesult of the changes Inproduction methods, and marketing channels. We believe that governmentto exact payments from the new peasant proprietors willontinuing cause of friction, even though payments arc to be spreadhirty-year period and compensation rates have been set at half or less of the current value of the land
he RCC has been forced to address Itselferious cotton situation resulting from excessive speculation under preceding regimes, Increased production of Egyptian cotton,lump In the world cotton market. Soon after the beginning of the new cotton crop year Inhe RCC government found that the statearge carry-over from the preceding year's crop and that speculation had pricedcotton out of the world market, In which prices were falling. The government closed the futures market, pegged the price ofand offered to buy it at that price in order to prevent the ruin of Egyptian With great effort the agents of the
government have succeeded in disposing ol more cotton abroad than had been sold or bartered at this time last year. The bigproblems, however, remain unsolved. Because of increased Egyptian production, this year's carry-over will probably be larger than last year's, even if sales hold up. The moat dangerous element in the situation is the effect that the current low price of cotton (leas than half of last year's price for the long staple variety) has on foreign exchangeupon which Egypt depends for vital imports.
nder the present organization of the Egyptian economy, Egypt exports about half of Its agricultural output by value, using the proceeds to purchase essential foodstuffs and items like fertilizer needed to maintainOf these exports, cotton Ls by far the most important, normally providingercent of Egypt's foreign exchange earnings Egypt could makeontinuation of the present slump in world cotton prices. It could probably divert considerable additional acreage from cotton to wheat, but even at present prices wheat is still far more expensive to produce at home than to buy with cotton proceeds abroad. Egypt may be able to barterquantities ot cotton to the Soviet bloc in exchange for wheat and other goods. In any case. Egypt's economy would probably still remain heavily dependent on the exportingle commodity, the world price of which is unsteady and may be moving downward. Moreover, it will probably be impossible toubstitute high money-yield crop or to achieve comparable returns from crop
he RCC will also be burdened by Egypt's basic economic and social problem, namely the extreme poverty caused by the pressure of rapid growth of population on the country's meagre resources There Is no readyto this problem. The productivity of land now under cultivation probably cannot be substantially increased. Although It is estimated that the cultivated area could be enlarged byoercent throughand irrigation of presently unused land.
this might cost as much as ten billion dollars, or one-quarter of the total national incomewenty-year period. In past years, gains in Egyptian production have been more than matched by Increased population, and there is no reason to believe that there will be any rapid change in the conditions which are currently stimulating population growth. Industrial developmentcale sufficient to affect the Egyptian standard of living would require an investment which, like thatfor the reclamation of potentially cultivable land, Is larger than the economy can carry. Moreover, possibilities fordevelopment are limited by the scarcity of known natural resources and by theof an adequate Industrial base on which to build.
Egypt's military forcesrnan army consisting of two infantryplus smaller Infantry, armored force, antiaircraft, and coast artillery units; an air force ofen,ighterf them7 bombers, andransports;avy ofen. equippedariety of light escort and coastal patrol vessels. These forces,with the police, are adequate forinternal order, although their present combat effectiveness is low. Much of the equipment on hand is obsolete or obsolescent, and there are serious shortages not only in major Items of unit and individual equipment but also Ln spare parts and ammunition.
Egypt's present leaders, whose drive to power stemmed Initially from resentment over the weakened and corrupt/stale of the armed forces under King Farouk, have made it clear that they want toodern military establishment capable of standing up against Israel and capable of assuming sole responsibility for defense of Egypt's cities and bases. This desire to strengthen the armed forces is reinforced by recognition of the favorable psychological effect whichesult would have, not only on the population at large but also on the military forces themselves, on whose continued
port the present regime relies primarily for survival. However. Egypt cannot obtain the volume of equipment it desires withoutthe conditions which the US and UK wish to impose Moreover, even if equipment is made available, the transforms ti on of the Egyptian military establishment into anfighting force will require sustained outside technical assistanceong period of training. Although their effectiveness as combat forces would probably remain low, Egyptian forces could be extremely useful as base and line of communications personnel
he RCC government has had its greatest success in the field of foreign policy. It has concluded that Egypt's strategic assets and the West's need for Egypt's cooperation make it possible for Egypt to bargain effectively with the West It has consequentlythe unyielding approach of Itsand entered into negotiations with the West. This does noteversal of basic Egyptian attitudes. The RCC iswith the West, not because it is pro-Western, but because it believes it can thus best achieve its principal foreign policy(a) full sovereign independence and the strength to maintain it. The government also believes that the realization of thiswould contribute to the accomplishment of Its other principal foreign policy alms: (b) leadership tn the Arab world: andf the expansion of Israel.
he achievement of full Egyptianthrough the evacuation of the Sudan and the Suez base area and the military and economic build-up of Egypt with Western aid are the most important of the government's announced foreign policy objectives. the RCC hasore flexible policy In bargaining with the British on the Sudan question, RCC members probably share the almost pathological distrust of the British which characterizes their countrymen. success In Anglo-Egyptian negotiations will tend to ease relations between the two countries, but will almost certainly notmutual suspicions.
Egyptians do not regard the US as apower, but US support of Israel has made them profoundly suspicious and resentful of US policy In the area. At the moment the Egyptian Government has an extremelyattitude toward the US. but this isbased largely on considerations ofThe RCC has counted on the US to bring pressure on the UK to make concessions and sees in the US the most likely source of military and economic assistance. If the RCC became convinced that it could notthese benefits from the US. it would almost certainly abandon its presentattitude. Under any circumstances, the RCC would object to anything which itas US Interference in Egyptian affairs.
The Egyptian Government will continue its policy of developing and exercising political ascendency In the Arab world. Although Egypt may devote increasing attention to the Sudan and Libya, It will continue to play the leading role In the Arab League. The other Arab states would probably follow Egypt's lead In associating themselvesiddle East defense organization If offered comparablyterms, and would be unlikely to join if Egypt failed to do so. The other Arab states will also tend to give considerable weight to the Egyptian position In such matters as joint action relating to Israel. With the possible exception of Syria, however, they are unlikely to recognize Egyptian authority to makefor the Arab League.
The RCC is well disposed toward Pakistan and would probably welcome that country's participation In an area defense organization In which Egypt was Involved. However, it would resist Pakistani efforts to exerciseIn the Arab world.
Egypt's desire lo obtain and to continue to receive military and economic aid from the West may lead the government to restrain itself In Its public utterances and public policy toward Israel, bul Egyptian hostility toward Israel cannot be expected to change. The RCC will attempt to strengthen the Arab League boycott, which it recognizes has been causing trouble for Israel. Egypt's policy on the procurement of arms and military assist-
ance will continue to be conditioned in large measure by IU desire to redress the military balance of power between itself and Israel. There Ls little likelihood that Egypt will take steps to come to an over-all peace settlement with Israel, or accept such overtures as Israel is willing to make. However, the presentevident belief in the advantages of bargaining and of compromise may lead It to move toward some more specific regulariza-tion of its relations withhe attitude of the RCC toward the East-West conflict is opportunistic. Itore immediate threat from Israel and the UK than from the USSR, it regards the cold war primarilyircumstance which enhances its bargaining power with the West,the US. It is willing to contemplatewith the West for regional defense mainly because it hopes the West in return will evacuate the Suei base area and grant military and economic aid. If aid were not forthcoming from the West, we believe the Egyptians would probably attempt to obtain arms from or to expand trade with the Soviet bloc, although, as with the West, they would attempt to avoid any agreements with the bloc which would Involve any form of pobtical alignment. However, opportunities for trade with the Soviet bloc axe limited and the USSR would not be likely to give substantialto any Egyptian regime which was not under virtual Communist domination
PROBABLElthough the present government iscapable of maintaining security and has reportedly made provision for an orderly succession within the RCC, the Egyptiancontains so many elements ofthat the course of events might beshifted by some unpredictableNevertheless, the present regime apparently Intends to follow througholicy of achieving Egyptian objectives ifthrough negotiations with the West. The outcome of these negotiations not only willajor effect on Western interests In Egypt and tn the rest of the Middle East but also Is lutely toeterminingon the RCC's future policies andof power We foresee no domestic issues which are likely lo produce serious dissension within Ihe RCC or to provide opposition groupsufficiently powerful lever to oust it from office during the next few months. Economic problems, while serious, arc not likely to assume critical proportions during that period. Thus the earliest and possibly most decisive test of the regime is likely to arise over foreign policy.
first stage in the execution ofhas recently been completed byof an Anglo-Egyptian agreementfor seUdelermination of thea period of three years. The RCCthe early removal of theSudan administration andat least temporarily Ihe good willgreat majority of Sudanese leaders.Powers, meanwhile, haveremoval of the principal stumblingsettlement of their other outstandingwith Egypt without abandoning thethat the Sudanese must be able tothemselves whether they wish to beex joined in some fashion with Egypt
Negotiations with the UK and the US
the completion of Ihe formalnegotiations are now to goon the future of thebase and on Egypt's role In defense ofEast. It ls expected that Egypt willa firm commitment regardingof British troops from Egyptian soilof UK-US economic andin return for commitments: (a) Western use of the Suez base Inwar; (b) peacetime maintenance andof the Suez base area; andarticipationegional defense
are unable to estimate the outcomenegotiations.
a On the one hand, the successfulof the Sudan talks has created aatmosphere for the negotiations RCC members have conceded the need for Western technicians to maintain the Suez base, and have indicated that the government would be
willing to consider participation In Middle East defense planning once its demandsevacuation and military assistance had been met. The British, for their part, have agreed to the principle of evacuation of their troops from Egyptian territory,that satisfactory alternate securityarc worked out with Egypt
b On the other hand, the multitude ofwhich must be worked out and the attitudes which the UK and Egypt are likely to display In dealing with each other will tend to make the negotiations protracted and The UK will probably continue tothe Egyptians as oriental bargainers who would be quick to take advantage of anyand who would regard any freely offered concessionign of weakness; inthe British will probably continue toegalistic step-by-step bargainingdesigned toirm Egyptianin return for every British concession made. For their part, the Egyptians will tend to remain suspicious about British sincerity on the evacuation issue, skeptical about the military necessity for foreign participation in the maintenance and the ground defense of tbe Suez base area, and anxious to make the most of current Western eagerness toettlement.
egotiating difficulties are mostly likely to arise over the following points:
a. Evacuation of the Suez Base. The UK plans to phase withdrawal of British troops from the Suez base area with progress in the negotiations, in order to insure Egypt'sthrough with negotiations in good faith. On the other hand, the Egyptians have not only insisted that complete evacuation of British troops from Egyptrerequisiteeal with the West, but have sometimes asserted that serious negotiations might be out of the question until evacuation had been completed.
b. Air Defense. The UK will urge thenecessity of having RAF squadronsIn air defense of the Suez base area until Egyptian capabilities improve.distrust of the British and theiron the question of sovereignty may lead them to reject this proposal or to demand restrictions on RAF activity unacceptable to the British.
Technicians. Arguments overof technicians needed and theirwith the Egyptian Governmentcertainly arise.
Defense Organization.the Egyptians have indicated ato discuss plansiddle Eastorganization if their ownfulfilled, they have shown little realfor the project and willto keep their own commitmentsinimum. They willbe reluctant to grant therights ln Egypt. Incan be expected to takeritish officer head theor staff organization. Themay present their own plan for anorganization based on theSecurity Pact.
e. Economic and Military Aid. Themay object to the proposed phasing of aid to progress in the negotiations. They may make unreasonable demands regarding the type and quantity of aid, and may hold out for grant aid with no strings attached. Finally, probable British insistence on the UK's position as Egypt's habitual source of military supplies may cause difficulties.
If Negotiations Break Down
f the negotiations broke down completely and If the US and UK were unsuccessful in evolving some new and different approach to the problem, we believe that the situation in Egypt would gradually deteriorate. Open opposition to the British would increase, and opponents of the policy of negotiating with the West would be strengthened. At leastthe RCC would probably seek tothe US of the necessity of assisting them regardless of what the British thought.for US economic and militarywould be renewed, accompanied byof the Increasing danger of theof power by Communist or
aiist elements and by bin la teat Egypt might be forced to turn to the Soviet bloc for assistance
f the stalemate between Egypt and the West continued, the regime would almostbe compelled to adopt new tactics. US ability to influence the situation would The Egyptian Government would probably seek to obtain arms from and toits trade with the Soviet bloc. Anti-British demonstrations would probably take place In the cities,enewal of guerrilla warfare against the British troops In the Suez base area would be likely. Although the Egyptians would not be capable of physically expelling the British garrisons there, even If the Egyptian Army were employed, aof guerrilla attacks and economic sanctions could make the operation and maintenance of the base difficult and costly. As tensions mounted within Egypt, the RCC would face Internal dissension, increasingand possible overthrow. Anyregime would probably be moreand anti-Western. Serious disorders would lead the British to consider military occupation of other parts of Egypt.
If Negotiationsf the RCC succeeded In reaching aagreement with the West. Its position would be greatly strengthened. Even if some technicians and RAF units were allowed toEgyptian assumption of control over the Suez base and the evacuation of Its British garrisona goal which previous Egyptian governments have attempted in vainwould represent an important triumph for thewhich would add to Its prestige andthe opposition. The removal of the immediate causes of friction between Egypt and the West under these favorablewould Increase Egyptian self-esteem. Finally, receipt of economic and military aid would further strengthen the position of the government and permit It to make sometoward improving economic conditions.
chievementeneral settlementEgypt and the West would at best ameliorate the situation and would not Itself
guarantee lasting results. Several potential sources of friction between Egypt and the West would remain:
of the West and lack ofconcern over the Soviet menaceat least initially.esultprobably be gTudging In itsthe Middle East defense organizationseek, in response to popular pressureits own initiative, to circumscribe theof the defense organization and ofmilitary advisers within Its territory.
would almost certainly insisteconomic and military aid asof continued cooperation with thein the rnilitary field,be likely to arise over the amountof Western assistance.
between the Arab stateswould continue, and the provisionamounts of military equipmentwould arouse Israel's fears of ahostilities. US association withcontinue to handicap US relations with
ther potential sources of friction not directly connected with the settlement will remain:
a. Some friction will probably anse over implementation of the Sudan agreement,as the time for elections and for the later decision on Sudan's future status comes near. The retiring British element In the Sudan administration Is bitterly hostile to Egypt and will probably seek to encourage anti-Egyptian tendencies In the Sudan. Egypt, on the other hand, will probablyelectioneering and proselytizing tactics to which the British would take exception
he status of the Suez Canal might also become the subject of controversy. Egypt has sought to prevent the movement of Israel-bound goods through the canal, and theand French have asked the help of other Western nations to bring an end to thisThe RCC government will probably continue to attempt to block the passage of Israeli goods.
The Outlook for Internal Stability
n any event, Egypt would remain aunstable country. Under the best of circumstances, tbe RCC regime would have serious problems of management and social adjustment In carrying out its internal reform program. In addition, it has only limited ability to fulfill the hopes and expectationsetter life which Its own program is helping to stimulate. Egypt's economic fortunes will continue to be largely determined by theof the world cotton market The younger middle-class element whichthe most volatile group in Egyptianlife will still find only limitedfor acquiring Jobs and status. Finally, the government will continue to be confronted with the underlying difficulty of coping with heavy population pressureand of scarcity in all the factors required lo expandand Industrial output. Although thishronic problem which may never emerge Ln the formlear-cut immediate crisis, it nevertheless makes Egypt's long-rangefor stability unfavorable.
ven with the benefit of foreign military and economic aid, the regime would still have difficulty in sustaining the atmosphere of progress which has helped to buttress its position thus far. In order to provide the lower middle and fellahin groups with an emotional substitute for unachieved social and economic Improvements, it might be obliged to adopt extremist policies, in the foreign as well as in the domestic field. If the regime failed to make continuing progress and was unable to provide adequatesubstitutes, it would probably have toincreasingly to repressive andmethods to remain in power.