Vol. 22, No. 5,514 - The American Reporter - September 7, 2016

by Mark Scheinbaum
AR Financial Correspondent
Boca Raton, Fla.
January 28, 2011
Market Mover

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BOCA RATON, Fla., Jan. 29, 2011 -- The demonstrators in Cairo met by riot police, tear gas, and a gathering of soldiers and tanks should remind American and other diplomats of events 58 years ago this month, when Lt. Col. Gamal Abdel Nasser Hussein shook up Egypt, the Suez Canal and the world.

In Washington this week, President Barack Obama - through comments on television, on YouTube and through Vice President Joe Biden and Sec. of State Hillary Clinton (now on the road) - has had to walk the foreign-policy tightrope I'd call "Better the Devil we know, or the unknown revolutionary?"

To even refer to Egyptian President Hosni Mubarak as "the Devil" is pushing truth a bit, at least from Washington's perspective, but they aren't yet backing Mubarak with any fervor.

For three decades, Mubarak has fought domestic crises to maintain strong support for American initiatives in the Middle East. Before, during, and after the Sept. 11, 2001, attacks on America, Mubarak often worked to defuse tensions between Egypt and Israel. As one might observe upon the demise of Marshall Tito of Yugoslavia, and during the overthrow of the Shah of Iran, "revolution" and "civil uprisings" come at a price. The price does not always purchase anything remotely resembling U.S.-style democratic freedoms.

Nasser, on precisely this week in 1953, considered himself too low-ranking to garner wide public and elite support for a takeover in Egypt, so he manipulated his rise to power through surrogates. But the evolution of his strong rule, two wars with Israel, and the Suez Crisis (which allowed Washington to take the high ground as France and Britain plotted for regional interests) offer some familiar lessons for today's observers.

By the standards of well-to-do Egyptians, Nasser and his family lacked the military and political pedigree needed to climb the ladder to influence and power. Yet, using well-cultivated patrons and formative stints in the civil service, law, business, and military, the onetime Egyptian postman built a mass movement.

In fact, along with other academics, the late Prof. James Davies, in his landmark "J-Curve Theory of Revolution," points to mounting conflicts between rich and poor in Egyptian society over two decades, from the beginning of the Depression to the end of World War II and the rise of Nssser, as a classic template from which the cause and course of revolutions can be discerned.

The United States, Western Europe and moderate Arab states and emirates have actually applauded Mubarak's ability in recent decades to turn on and off the tap of government controls, and give his repression of civil and religious rights in favor of secular power credit as a model for blocking the rise of radical Islam.

There is, in the continuum of the Nasser legacy and 30 years of Mubarak, a variation on a theme. Their political repression dovetails with the rise of instantaneous global communications via the Internet and satellite and cell phones. Mubarak, who has used control of the press to subdue young Islamic militants in recent years, and a pseudo-police state to jail or murder his opponents, has come face-to-face with the revealing instruments of his own demise.

To cut off cell service, he called Vodafone and other cell phone providers to exercise the terms of the contracts and licenses allowing them to operate in Egypt. He also shut down Egyptian-based servers that link users to Facebook, Twitter and other social networks to keep activists from communicating with others in their neighborhoods and friends and relatives overseas.

Cutting off Internet and social networks only goes so far these days. In a world of Blackberries, Androids, 3G, 4G, mobile CNN and BBC satellite uplinks, earth stations and all the rest, many of us who roam the globe on business shrug off attempts to restrain our livelihood. Even a low-cost Kindle electronic reader can easily be configured into an entire library of global news and information by average users anywhere in the world.

The BBC reported early today that users of iPhones and other high-tech devices in Egypt were simply contacting friends and family with detailed links and instructions for downloading new "applications" which basically take Cairo - or any other government - out of the communications control business. And as for shutting down Facebook? It's hard to keep a secret among 600 million people.

When CNBC-TV correspondents at the World Economic Conference in Davos, Switzerland, chatted in "long-form" interviews with U.S. network anchors from the back of a truck in Cairo, the communications were seamless. No Cairo correspondent would give up the specific details of the links he'd cobbled together, but one simply indicated he'd set up a direct satellite link "and decided just to keep it on and never shut it down."

The implication was that anything short of having police tracking them down via the tv feed to arrest or shooti them, the government of Egypt hasn't the slightest clue how to compete with Cisco, AT&T, Cable & Wireless, Google, Apple, SAP, Microsoft and IBM.

International viewers might note that as local police monitored Cairo demonstrators, for the first three days things - on the surface - seemed rather calm. We now learn that behind the scenes youth leaders and "pro-democracy" activists were being rounded up and beaten, and some were allegedly killed.

As tens of thousands of Egyptians took to the street after Friday prayers, many had emails with guidance on how to behave, march, and what to wear to protect themselves from teargas and rubber bullets. Early tv broadcasts showed demonstrators marching down the streets as police in riot gear on the sidewalks did nothing.

To a distant observer it also appears that smashing windows, looting, and brick-throwing at police started only when they tries to stop the marches. On CNN a few hours later, we saw demonstrators chanting in Arabic the words "Freedom! Freedom!" tanks and regular Egyptian Army forces arrived. Even with automatic weapons and M-1s, the soldiers are still viewed as more professional, honest, and restrained than police forces, who are perceived as corrupt under the Mubarak regime.

But Egypt's image has suffered. Last year, Egypt was touted as the next BRIC (Brazil-Russia-India-China), an emerging market investment target like Vietnam, Colombia, Turkey, and Indonesia. Despite such optimism, Egypt still remains a Third World nation that derives 50 percent of its GDP from overseas fund transfers sent by Egyptian workers abroad = and npow it's facing a revolution.

The dilemma for the United States and other Egyptian friends and trading partners is simple. Nothing we see in the Western press cures the suspicion that the same black-clad gangs of activist-militants who for decades tried to gain elected political power in Egypt are deeply involved in the street demonstrations.

Depending on the investor, cries of "Freedom" can be heard as "freedom for secular democratic civil, artistic, religious, gender, and sexual rights" or "freedom for mobilization, expansion, and implementation of Islamic law la the Taliban."

In this fluid state of events, it's not much of a stretch to believe Iran - after thwarting its own "people's revolution" last year and now on a path to nuclear weapons - has a dog in this fight, even a toothless one.

The Iranians have to ask whether a successor regime would follow the road of Jordan and Dubai to internationalism, commerce, and moderate Islamic religious freedoms, or march to the drumbeat of anti-Zionist rhetoric, embracing political and trade ties to Iran and joining the fraternity of anti-Western radicals in Iraq, Afghanistan and Pakistan?

If that turns put to be the palate of a region-wide canvas on which Iran can Yemen, Tunisia, the Sudan, Algeria, Jordan, Lebanon and even Libya, scary times will be ahead.

Commodity and equity markets do not like "scary" events, so mounting concerns about Egypt during the day killed off a nine-week rally on Wall Street, dropped the soaring Dow Jones Average 166 points, and added upside volatility to oil stocks. For those in those stocks it might have been a good day, but anything that threatens stability in Egypt can threaten the flow of trade through the Suez Canal.

Half of the world's seaborne commerce and much of its oil is tied to an open Suez Canal. Its closure from the Red Sea to the Mediterranean would lead to a declaration of a "force majeure," in which insurance companies, bonding agents, and shippers say "all bets are off" on insured cargo due to uncontrollable or unforeseeable events. Saudi oil would not be shipped for as long as it lasted.

Higher oil prices turn into huge losses for oil companies when delayed shipments, delivery failures and destroyed tankers - and pollution - occur as ships and tankers get caught on the margins or the crossfire of war. That really scrambles the balance sheets and leaves the markets paralyzed.

The worldview of Nasser included a three-year experiment called the United Arab Republic, a theocracy that he hoped would dictate a policy of hate and exclusion; it failed him. And using the fear that an Iranian-style theocracy is forming to shut down freedom of expression, and calling out the army to stifle the legitimate protest of Egyptians marching along the ancient streets of Cairo and Alexandria, could also fail Mubarak. You can't predict what will happen.

We only know that the Devil Unknown is waiting offstage.

AR Correspondent and political scientist Mark Scheinbaum is managing director of LF-Financial LLC. He has taught foreign policy courses at the University of Florida, University of Georgia, and most recently at the Panama campus of the University of Louisville. His comments are his own and not necessarily the views or policies of LF-Financial LLC.

Copyright 2016 Joe Shea The American Reporter. All Rights Reserved.

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