Egypt was the most important manufacturer of weapons and military components among the Arab countries. State-owned enterprises, under control of the Armament Authority headed by a major general, were the main domestic producers of Egypt's defense systems. The Armament Authority was responsible for selecting, developing, and procuring military systems. Acting on behalf of the military's branches, the authority assigned production to domestic factories or contracted with external suppliers.

As early as 1949, Egypt unveiled plans to develop its own aircraft and armaments industry with the industrial base that emerged during World War II when British and American forces placed orders for equipment. Egypt entered into a number of joint venture projects to produce European-designed aircraft. The most successful of these led to the Jumhuriya basic flight trainer, of which about 200 were eventually made. In 1962 Egypt undertook a major program with the help of West German technicians to design and build a supersonic jet fighter, but the government terminated the project because of financial strains caused by the June 1967 War. In a separate program assisted by West German scientists and technicians, the air force built prototypes of three SSM designs. These designs, however, were never put into operational use.

During the 1970s and 1980s, Egypt expanded and diversified its production of arms to achieve partial self-sufficiency and to develop an export market in the Middle East and Africa. In addition to manufacturing small arms and ammunition, Egypt had begun producing or assembling more advanced weapons systems through licensing and joint venture agreements with companies based in the United States and Western Europe. Egyptian technicians and scientists developed several indigenous weapons systems.

The National Organization for Military Production within the Ministry of Military Production supervised a number of manufacturing plants, which were usually named after their location. These plants included the Abu Zaabal Company for Engineering Industries, which produced artillery pieces and barrels the Abu Zaabal Tank Repair Factory, which overhauled and repaired tanks and would eventually become the producer of Egypt's main battle tank the Al Maadi Company for Engineering Industries, which produced light weapons, including the Egyptian version of the Soviet AK-47 assault rifle the Hulwan Company for Machine Tools, which produced mortars and rocket launchers the Hulwan Company for Engineering Industries, which produced metal parts for ammunition, shells, bombs, and rockets the Heliopolis Company for Chemical Industries, which produced artillery ordnance, bombs, and missile warheads and the Banha Company for Electronic Industries, which produced communications devices.

In 1975 Egypt, Qatar, Saudi Arabia, and the United Arab Emirates founded the Arab Organization for Industrialization (AOI) and capitalized the new organization with more than US$1 billion. These countries set up the AOI to establish an Arab defense industry by combining Egypt's managerial ability and industr 1000 rial labor force with the Arab countries' oil money aออออออออnd foreign technology. The bulk of the arms manufacturing was intended to take place in Egypt. But the AOI foundered before it could become a major arms producer because the Arab states broke relations with Egypt over Sadat's peace initiatives with Israel. Egypt kept the AOI functioning in spite of a 1979 proclamation by Saudi Arabia dissolving the body. Some of the AOI's members have renewed military contacts, but as of 1989, the AOI had not been restored to its original status.

The AOI had operated as an independent enterprise since 1979 and was exempt from Egyptian taxes and business restrictions. The AOI consisted of nine companies, five wholly owned by Egypt and four joint ventures. The Egyptian plants manufactured missiles, rockets, aircraft engine parts, armored personnel carriers, electronics, radar, communications gear, and assembled aircraft. A joint venture with French firms assembled Gazelle combat helicopters and helicopter engines. A joint venture with the British manufactured the Swingfire antitank guided missile, while another venture with the Chrysler Corporation produced jeeps.

As of 1990, Egypt did not manufacture its own aircraft, but it assembled Tucano primary trainers from Brazil, Chenyang fighters from China, and Alpha Jet trainers designed in France and West Germany. Egyptian technicians had also reverse engineered and modified two Soviet SAMs--the Ayn as Saqr (a version of the SA-7) and the Tayir as Sabah (a version of the SA-2). Egyptian shipyards had produced eight fast attack naval craft fitted with British armaments and electronics.

The only armored vehicle in production was the Fahd four-wheeled APC, although the United States and Egypt planned to coproduce 540 Abrams M1A1 main battle tanks over a ten-year period beginning in 1991. The project would be funded largely through United States military aid the United States would also supply the engines and fire control systems. According to some reports, Egypt was reconsidering the project because of its high cost. But as of late 1989, Egypt appeared to be going forward with the plan.

In September 1989, Egypt had reportedly dropped out of the Condor II project, cosponsored with Argentina and Iraq, to develop an intermediate-rage (800-kilometer) SSM. Earlier that year, officials in the United States had arrested several persons, including two military officers attached several persons, including two military officers attached to the Embassy of Egypt in Washington, in connection with the illegal export of missile technology and materials needed to produce rocket fuel and nose cones.

In March 1989, United States and Swiss officials claimed that Egypt had imported from Switzerland the main elements of a plant capable of manufacturing poison gas. Mubarak denied that Egypt had either the facilities or the plans for producing chemical weapons.

The main purchaser of Egyptian defense products had been Iraq. In the early 1980s, Iraq was desperate to replace Soviet military equipment lost during the early stages of the war with Iran. Iraq blunted Iranian attacks with the Saqr 18, the Egyptian version of the Soviet BM-21 122mm multiple rocket launcher.

Egypt sold a smaller volume of weapons to Kuwait and other Persian Gulf states. In 1988 Kuwait was reported to have ordered about 100 Fahd armored personnel carriers Oman and Sudan ordered smaller quantities of these carriers. Because Egypt considered the value of its military exports confidential, it omitted this information from its published trade statistics. According to ACDA, Egypt exported US$340 million worth of military equipment in 1982, declining to an average of US$70 million annually in the years from 1985 to 1987. The ACDA data was considered conservative. Other estimates have placed Egyptian defense exports as high as US$1 billion in 1982 and US$500 million annually in 1983 and 1984, when deliveries to Iraq were at their peak.

International observers believed that Egypt has not engaged in efforts to d 758 evelop a nuclear weapons capability. Egypt had a small nuclear research reactor that was built with Soviet assistance, but the Soviets controlled the disposal of the facility's spent fuel. In any event, the facility was not capable of producing a significant amount of weapons-grade material. Egypt signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) in 1968 but delayed ratifying it, presumably because the government had evidence that Israel had embarked on a nuclear weapons program. In 1975 the United States agreed in principle on a program to supply Egypt with power reactors. The plan was subject to a trilateral safeguards agreement signed by the United States, the International Atomic Energy Agency, and Egypt. Although financing problems stalled construction of power reactors from the United States, Egypt ratified the NPT in 1981, in order to be able to conclude agreements with other countries for the construction of atomic energy-production facilities.

Data as of December 1990