Saturday, January 29, 2011

Whither Egypt?

I was last in Egypt more than a quarter of a century ago, in the early days of the Mubarak regime, before the US had seriously paid down the bill for the martyred Sadat's Camp David signing, which Mubarak upheld. That payment, probably the most serious thing that billions of US aid over three decades did for actual Egyptian citizens, was replacing the sewer system of Cairo, whose exploding flooding had triggered massive "sewage riots," although not as large as the food price riots of 1977 when Sadat attempted to remove subsidies and price controls on food under pressure from the IMF, by far the largest riots until those now occurring there.

This has been a long time coming and how it will end is very far from clear. Roughly there seem to be generally three possible outcomes: 1) Mubarak maintains control following the Iranian success in suppressing street uprisings, an outcome that reportedly the Israelis are predicting and most certainly hope will come true; 2) Mubarak falls to be replaced by Mohamed El-Baradei, former director of the IAEA, whose accurate reporting of the state of nuclear weapons in Iraq led G.W. Bush to try to remove him from his position and who has returned to be surrounded in a mosque with supporters by security forces giving him Islamic cred, even though he is the main hope of the social democratic secularists; 3) Mubarak falls to be replaced by the main opposition in the parliament, who are front parties for the Ikhwan, aka "Muslim Brotherhood," with this possibly leading to more radical factions of that group coming to power, ending in a Sunni-Egyptian version of Iran. As of now, there is no way to know which of these will triumph, and there are other more complicated possible outcomes.

Regarding the economics of this, Egypt is a peculiar combination of decaying state socialism and horrendously corrupt emerging capitalism. Egypt is an ancient country that is very cynical. They have seen it all, but they have been under an increasingly repressive rule with increasing inequality and growth unable to provide jobs for a rising and technicially sophisticated generation, this despite such ameliorative policies as the longstanding price controls on food.

The situation in Egypt parallels in many ways that in such countries as Tunisia, Algeria, Yemen, Jordan, and Lebanon, all of which have been experiencing uprisings led by young Sunni Arabs, although the details vary from country to country, along with the seriousness of the uprisings. It is in Tunisia and Egypt where these uprisings seem the most serious, with real possibilities of some kind of secular social democratic outcome quite possible, which would be a dramatic breakthrough of enormous significance. Unfortunately, the US has been very slow and far behing getting aboard these movements and supporting their more progressive elements. But in the end, the outcomes in all of these countries will have little to do with the US and everything to do with the people in those countries.

I note that Juan Cole at as usual provides very useful reporting, commentary, and links on what is going on there.


Godfree Roberts said...

Comparing Egypt to Iran is misleading. Iran is a democracy with a flourishing free press and a vigorous, outspoken, and even rash opposition movement.
Iran's riots were similar to Thailand's, and for similar reasons. In Thailand's case, the King has final say; in Iran it is the Supreme religious figure.

Barkley Rosser said...


Well, there is reason to believe that the once functioning Iranian democracy has broken down and that the last election was interfered with. There were massive riots for days on end that were violently put down, with leaders of the opposition tossed into jail. It is not a democracy anymore, although it once was.

Heck, Egypt has elections and opposition parties. As in Iran, the elections are rigged though, and the opposition is limited. The big difference is that there is quite a lot of popular support for the incumbent regime in Iran, while there appears be very little anymore in Egypt.

Oh, and Egypt has a supreme leader too, the president, Mubarak, who has been in power for 20 years.

David Stern said...

I didn't see any sign that the Iranian government lost control like we have seen in Egypt. Most likely outcome I think is that another general replaces Mubarrak and then promises free elections in a year or two. How free or fair they'll turn out to be is the question.

hapa said...

hmm a little more historic structural oomph behind khamenei, than your garden variety entrenched head of state.

Barkley Rosser said...

Oh, Mubarak has been in for 30 years, not 20. Certainly there is a different structure in Iran, where in fact the Vilayat-el-faqi is elected by the 12 member Council of Guardians rather than the population as a whole. At least in Egypt, Mubarak has been nominally elected by the population, even though those elections have been rigged.

Anonymous said...

Parallels are the massive inflation of the 1970s, when the price of gold rose from $3.50 an ounce to over $800 ounce to the general applause of Keynesian and monetarist economists.

You have all been begging for more quantitative easing to destroy the dollar again, raising from $250/ounce to over $1400/ounce since 2002. This brings high oil prices yes, but eventually the food prices catch up too. Part of what you saw in Iran in the 70s and Egypt today are bread riots.

The shah took economists advice to impose price controls which led to shortages and black marketeering. It won't be long before Mubarak or his replacement try the same thing at the urging of Krugman or other similarly-minded ideologues. said...


There already are price controls on certain food items in Egypt. It was the effort to remove them in 1977 that triggered the worst riots prior to now. No political leader since then has dared remove them. said...

I have to correct myself here. It turns out that most food price controls were gradually removed in Egypt during the 1990s. The major issue today has been the price of bread, with Egypt being the world's largest importer of wheat. Due to drought in Russia last summer and generally growing demand, the price of wheat has been substantially up, and this has contributed to anger in Egypt. This does not seem to be directly tied to the price of oil.

Anonymous said...

During monetary inflation the prices of commodities rise first. This happened in the 70s, and oil-producing countries made out like bandits for a while. Egypt doesn't produce that much oil, although they do plenty of farming.

Eventually prices of food etc start to catch up to gold and then all hell is going to break loose. said...


Well, I have to disagree with you about gold, which is a big fat zero in all this, and whose price has fallen recently. OTOH, oil and food are very important.

Anonymous said...

YOu are right that gold is going down... gold goes first. That is why they had the gold standard.

In the world of the floating dollar, gold will go down as the economy is expanding faster if the money supplied by the Fed is constant. It's monetary deflation.

The trouble with discretionary monetary policy is somebody is always getting screwed unfairly. It's immoral. That's why the fundies can take over during monetary screwups.

Brenda Rosser said...

whither capitalism when the price of food makes participation in an industrial economy unviable.

Even in the US hunger is affecting one in 7 households .