Reports that Egypt's oil suppliers are
cutting shipments to the nearly-bankrupt nation
coincide with a dramatic diplomatic shift towards
Iran by President Mohammed Morsi. Morsi's
attendance at the Non-Aligned Summit in Teheran
today denotes the end of Iran's diplomatic
isolation in the Sunni Arab world.
In
addition, as my Asia Times Online colleague M K
Bhadrakumar noted in his Indian Punchline blog,
Morsi proposed to include Iran in a four-nation
contact group to resolve the Syrian crisis, along
with Turkey, and Saudi Arabia. Morsi's outreach to
Iran at the
August 15 Organization of
Islamic Coordination summit in Mecca was welcomed
by Iran's Foreign Ministry. [1] [2]
At the
same time, Egypt has become a prospective threat
to Israel for the first time in more than three
decades. The deployment of Egyptian tanks in the
Sinai, supposedly in pursuit of terrorists,
violates the 33-year-old peace treaty with Israel,
and persuades some Israeli analysts that Egypt
might threaten Israel's southern border in the
event of an Israeli strike on Iran's nuclear
facilities.
"If Netanyahu finally decides
to strike Iran's nuclear sites, shouldn't he
consider a possible scenario, in which Morsi (soon
to visit Tehran for a conference), orders two army
divisions to cross the Suez Canal into Sinai?,"
asks Amos Harel, the senior defense analyst at
Ha'aretz. [3]
American analysts had
assumed that Egypt's massive need for external aid
would keep Morsi's Muslim Brotherhood on
Washington's leash. On the contrary, the
Brotherhood indicated its intent to benefit from
economic chaos months ago, as I wrote in this
space last April (see Muslim
Brotherhood chooses chaos, Asia Times Online,
April 11, 2012). Now the gravity of the situation
is beginning to sink in.
"Just two months
after coming to power, Morsi is pursuing a
rapprochement with Tehran and articulating a
newfound ambition to jettison billions in US
foreign assistance dollars and financing from
Western financial institutions," wrote David
Schenker and Christina Lin in the April 24 Los
Angeles Times. [4]
Economic privation, up
to and including starvation, is not necessarily a
hindrance to the exercise of power. As the
Bolsheviks demonstrated in 1917, the Somali
warlords during the 1990s, and North Korea for the
past two decades, starvation benefits a
totalitarian party ruthless enough to employ it as
a weapon of social control. Reports from Egypt
indicate that Morsi has begun rationing of daily
essentials, reinforcing the Muslim Brotherhood's
grip on power.
The Egypt Independent
reports, "The government decided to lower
subsidies on oil products from LE95.5 billion
[US$$15.5 billion] in the 2011-2012 budget to
LE25.5 billion in the 2012-2013 budget by applying
a coupon system on butane, gas and diesel in
addition to other procedures for rationalizing
energy consumption."
And according to
Magda Kankil of the Egyptian Center for Economic
Studies, Egypt will move to a ration card system
for bread as well. [5] If Egyptians want to eat,
or cook dinner with propane, they can apply for a
ration card to the local Muslim Brotherhood
office.
Egypt spends roughly US$25 billion
a year on fuel, and the present subsidy of 95.5
Egyptian pounds is a life-and-death matter for the
Egyptian poor. According to the Wall Street
Journal on March 22, "Subsidies already absorb at
least 28% of Egypt's budget outlay of 476 billion
Egyptian pounds ($79 billion). [6] About
two-thirds of that goes toward fuel and energy,
with the rest aimed at reducing food prices,
particularly for wheat."
A massive
reduction in subsidies combined with rationing
will put the existence of half of Egypt's people
under the immediate control of the state. Morsi's
apparent disregard of Egypt's economic crisis
conceals a deeper agenda, namely the entrenchment
of the Muslim Brotherhood in the kind of power
arrangement that characterizes modern totalitarian
states. That is the source of his contempt for
American diplomacy.
It is hard to recall
an American foreign policy failure so
catastrophic, and at the same time so bi-partisan.
As M K Bhadrakumar - the only English-language
journalist to predict Egypt's turn - put it in the
August 21 Asia Times, the US offered "an
invitation to Obama to Morsi to visit Washington.
And Morsi is instead traveling to China and Iran."
(See Egypt
thumbs nose at US, Asia Times Online, August
21, 2012).
The Republicans also reached
out to the Muslim Brotherhood. Former president
George W Bush declared on May 15, "America does
not get to choose if a freedom revolution should
begin or end in the Middle East or elsewhere. It
only gets to choose what side it is on."
When the Obama administration invited
Brotherhood officials to the White House in April
to protests from the Republican right, Weekly
Standard publisher William Kristol and Washington
Post columnist Charles Krauthammer defended the
dialogue on Fox News. [7] As late as August 2, Fox
News contributor Fouad Ajami predicted an
Egyptian-Saudi alliance against Iran: "An Egyptian
alliance with Saudi Arabia is the beginning of
wisdom - a necessary, though hardly sufficient,
condition for Egypt finding a way out of its
crippling past," he wrote in Tablet. [8]
Morsi has undertaken what Schenker and Lin call "a foreign policy shift rivaling the scope of
president Anwar Sadat's expulsion of the Soviets
in 1972 and subsequent reorientation to the West"
when his country is almost out of cash. Liquid
foreign exchange reserves at the Bank of Egypt
fell to $5.9 billion in July, enough to cover
barely a month of imports.
"Egypt is
finding it increasingly difficult to import fuel
as foreign banks and traders pull the plug on
credit," Reuters reported August 23. "In the
strongest evidence to date of rising fuel import
difficulties, traders said Egypt had to cancel a
tender to buy crude earlier this month after
receiving no bids, and also had to scrap parts of
a gasoline import tender because the prices on
offer were too high." [9]
The country's
economy faces paralysis due to an endemic shortage
of gasoline and diesel fuel, leading to regular
electricity blackouts. Lack of fuel has forced the
shutdown of bakeries, leading to regional
shortages of the subsidized bread that makes up
most of the caloric consumption of half of Egypt's
population living on less than $2 a day. [10]
Egypt received a cash deposit of $500
million from Qatar and a pledge of an additional
$1.5 billion after the August 10 visit of Emir
Al-Thani to Cairo. The same day, President Morsi
purged Egypt's senior officers and grabbed key
constitutional powers from the military. Qatar's
contribution, though, is a stopgap; the tiny
emirate has just $20 billion in total resources,
less than Egypt's annual requirement for external
financing.
Morsi's government is
negotiating a $4.8 billion loan from the
International Monetary Fund, enough to get through
a few months - if and when the money arrives.
Egypt has suffered from chronic fuel
shortages since the overthrow of Hosni Mubarak
early in 2011, including repeated breakdowns in
electricity provision, as The National reported
August 19. [11] It seems likely that the Morsi
government will shift food subsidies to a ration
card system as well, according to the Egypt
Independent. Bread shortages appeared at the end
of Ramadan in some Egyptian provinces, al-Ahram
reports. The Morsi government blames corruption by
bakers. [12]
It has been, or should have
been obvious all year that a dual power situation
(as the Bolsheviks described it in 1917) has been
gestating. The remains of the military-led
government controlled the official levers of
state, while the Muslim Brotherhood distributed
food and fuel on the street. As I wrote on April
11 on this site:
The Brotherhood believes that
widespread hunger will strengthen its political
position, and is probably correct to believe
this. As the central government's corrupt and
rickety system of subsidies collapses, local
Islamist organizations will take control of food
distribution and establish a virtual
dictatorship on the streets. American analysts
mistook the protestors of Tahrir Square for
revolutionaries. The Muslim Brotherhood now
reveals itself to be a revolutionary
organization on the Leninist or Nazi model.
The Brotherhood's revolutionary program
has been gestating for some time. As food and
fuel shortages emerged in the first months of
after the downfall of President Hosni Mubarak
last year, Islamist organizations already began
to fill the vacuum left by the breakdown of the
old civil regime. The Ministry of Solidarity and
Social Justice began forming "revolutionary
committees" to mete out street justice to
bakeries, propane dealers and street vendors who
"charge more than the price prescribed by law",
the Federation of Egyptian Radio and Television
reported on May 3, 2011. According to the
ministry, "Thugs are in control of bread and
butane prices" and "people's committees" are
required to stop them. (See Muslim
Brotherhood chooses chaos, Asia Times
Online, April 11, 2012).
It also
should have been obvious that dual power - the
standoff between the Muslim Brotherhood and the
military - could not continue very much longer. I
wrote on July 11 under the title "The Economics of
Confrontation in Egypt,"
At best, international aid will
allow the status quo to continue a while longer.
But the status quo involves a barely-adequate
supply of bread, a dreadfully inadequate supply
of fuel, and no outlook for the future except
poverty and insecurity. It seems most unlikely
that a political or economic equilibrium can be
established on such a wobbly base. The uneasy
modus vivendi between the Muslim Brotherhood and
the military most likely will fail, and probably
sooner than later. See The
economics of confrontation in Egypt, Asia
Times Online, July 10, 2012.
Like the
Shah's generals in 1979 Iran, the Egyptian
generals have something to fall back on - the
townhouse in Chelsea or the yacht in Monaco. The
younger officers who replaced them after Morsi's
August 10 purge have no hope of enriching
themselves as their commanders once did, because
there is nothing more to steal. In retrospect, the
military's failure to fight back against the
Muslim Brotherhood could have been inferred from
its behavior since the overthrow of Hosni Mubarak
in January 2011. As foreign exchange reserves
vanished last year, I asked last October:
Egypt's economic route calls to mind
the country's military disaster during the 1967
war, when - according to the Egyptian
government's later evaluation - the military
collapsed in part because of "the army's fear of
telling [President Gamal Abdul] Nasser the
truth".
It appears at first glance that
the army does not want to tell itself the truth
about Egypt's economy. The truth probably is
simpler, and more sinister ... When the civil
societies of developing countries disintegrate,
the authorities often appear to be paralyzed. In
most cases, the anonymous little men in charge
of big functions are hard at work, making down
payments on Paris apartments and private jets.
Are
the Generals Stealing Egypt?, Asia Times
Online, October 18, 2011.)
In their
August 24 LA Times commentary, Schenker and Lin
speculate that Morsi will get help from China,
perhaps in return for a naval base on the
Mediterranean, or the keys to Egypt's F-16 and
Abrams Tank factories. They cite a 2009 cable
published by WikiLeaks warning that Egypt "had
more potential Section 3 [Arms Export Control Act]
violations than any country in the world."
China's interest in, and willing to
finance, the feckless fanatics in Cairo might be
exaggerated. But if Egypt turns into North Korea
on the Nile under Muslim Brotherhood rule, China
will feel right at home with the new regime.
America is confronted by a new and
unwelcome set of alliances in the Middle East. Its
cluster of allies - Egypt, Saudi Arabia, Turkey,
Jordan and Israel - is reduced to only two. Saudi
Arabia rails in vain at the "summit aligned
towards Iran", as Emad El Bin Adeeb derided the
Non-Aligned movement event on August 23 in the
Saudi newspaper Asharq Alawsat. [13]
Israel was wrong-footed by the Egyptian
government's challenge to the Camp David treaty,
and is absorbed in a wrenching debate over the
merits of a pre-emptive strike on Iran's nuclear
program. Turkey, whose Islamist government was
promoted as a model of Islamic democracy by the
Bush administration as well as by President Obama,
is paralyzed by the chaos on its border, fearful
that the Kurdish problem will spill over into its
own territory. Jordan's monarchy hopes to survive
by making concession after concession to the
Muslim Brotherhood.
Russia plays all
sides, negotiating with Israel for the price of
denying advanced anti-missile systems to Iran,
while sustaining Iran's allies in Syria's
beleaguered Assad regime. As the world's largest
oil producer, Russia stands to gain from the
insecurity of Persian Gulf oil supplies. China
watches on the sidelines wondering which of the
pieces are worth acquiring.
If and when
Iran acquires deliverable nuclear weapons, the
Middle East will shift irreparably into a state
that Americans barely can begin to fathom.
Paradoxically, an Israeli strike on Iran - in open
defiance of the Obama administration's wishes -
might offer the only hope of restoring America's
failing position.
A former Israeli
diplomat, Yoram Ettinger, draws a parallel to Levi
Eshkol's decision to preempt a building Arab
attack on Israel in the June 1967 war. Eshkol, he
observed on August 17, "preempted the anti-US Arab
axis; devastated a clear and present danger to
vital Western interests; rescued the House of Saud
from the wrath of Nasser; expedited the end of the
pro-Soviet Nasser regime and the rise of the
pro-US Sadat regime in Egypt; dealt a major
setback to Soviet interests; and demonstrated
Israel's capability to snatch the hottest
chestnuts out of the fire, without a single US
boot on the ground." [14]
With Iran
neutralized, the Assad regime in Syria would
become a friendless, purposeless hulk, and the
Morsi regime in Egypt the proprietor of a failed
and hungry state. Iraq, absent Iranian influence,
would settle down into low-intensity violence
without regional implications. Once again, the
House of Saud would be rescued from the wrath of
an overreaching Egyptian leader and US influence
would predominate in the Gulf.
Egypt is a
lost cause where Washington is concerned, but it
could be a ruined cause for anyone else. As I
wrote in May
Interdicting the Brotherhood, in
turn, requires an uncharacteristic harshness on
the part of American policy. War correspondent
Peter Arnett might have concocted the notorious
statement, "It became necessary to destroy the
town to save it," supposedly said by an American
officer of the Vietnamese provincial capital Ben
Tre in 1968. Something like that might be the
outcome for Egypt. (See The
Horror and the pita, Asia Times Online, May
1, 2012)
Spengler is channeled by David P
Goldman, president of Macrostrategy LLC. His
book How Civilizations Die (and why Islam is
Dying, Too) was published by Regnery Press in
September 2011. A volume of his essays on culture,
religion and economics, It's Not the End of
the World - It's Just the End of You, also
appeared last autumn, from Van Praag Press.
(Copyright 2012 Asia Times Online
(Holdings) Ltd. All rights reserved. Please
contact us about sales, syndication and
republishing.)
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