FROM THE ECONOMIST INTELLIGENCE UNIT
Unrest in Egypt raises questions about both about the future political make-up of that country and broader stability in the Middle East. David Butter, the Economist Intelligence Unit’s Regional Director for the Middle East, talks to Alasdair Ross about the implications of the crisis.
(Run-time approx 11 mins)
1/ How does the crisis in Egypt look like playing out? Who is likely to be running the country a month from now?
2/ The uprising last month in Tunisia was the trigger for the Egyptian unrest. But Egypt’s size and importance in the Arab world make events there particularly important for the rest of the region. Which might be the next dominos to fall?
3/ What do events in the Arab world mean for companies with investments there, in both the short mid term?
4/ Do these movements open opportunities for Islamist parties that have hitherto be marginalized from power? If so, what kind of politics might we see developing in their wake? Should we see Turkey’s moderate AKP as the model, or is something more militant likely to emerge. In other words, is revolution something that Western governments with an interest in the Middle East should fear?
5/ What possible scenarios could emerge in terms of US foreign policy in the Middle East, and how might ongoing events affect the regional balance of power with respect to Israel?
Alasdair Ross: Hello, I’m Alasdair Ross. The unfolding crisis in Egypt has implications for the political make-up of that country, but also for political stability in the region more widely. Today I’m speaking to David Butter, our Regional Director for the Middle East, to discuss the implications of these developments.
David, how do we think things are going to play out in Egypt. Let’s make a call here: Who do we think is going to be running the country, say a month from now?
David Butter: It seems likely that, a month from now, Omar Suleiman, who was appointed as vice-president by Hosni Mubarak early on in the crisis, in one of his first interventions after the demonstrations, will be the man in charge. In a sense he already is the man in charge, although we still at the moment have Mubarak nominally as the president. My feeling is that, a month down the line, we’ll have to have some mechanism for Mubarak to go, or to be put in the background, set aside, or even physically to leave the country, for any meaningful political process to go ahead. If the protests continue, if there is more disorder, I think we’ll have a similar result—that Mubarak also will have to get out of the way, and the army might take him out of the way. But my feeling is that General Suleiman is already talking to the opposition. There is some kind of idea of prioritising constitutional reform to lead up to a presidential election in which meaningful opposition candidates can stand later in the year. So I think there still is a chance of a political process of sorts, in which there is buy-in from the opposition, to get under way.
AR: The uprising last month in Tunisia was the trigger for the Egyptian unrest. But Egypt’s size and importance in the Arab world make events there particularly important for the rest of the region. Which might be the next dominos to fall?
DB: Virtually all of the countries in the Arab world are run by autocracies, so from that perspective they’re all vulnerable to opposition from below. Also, many of these countries share problems with inflation and high unemployment, so again the list is fairly long. But I think we can make a distinction between countries which have more specific things in common. First, they are republics rather than monarchies. I think the republics are vulnerable, specially those that have had long-term leaders who are thinking of handing down some sort of succession to sons or close relatives of the president.
So we have to look close to home; Libya, next door to Egypt—although it’s got more oil wealth and can buy off the population more easily than, say, Egypt can. But Colonel Qadhafi has been in power since 1969. The only successors being talked about are his son, Saif al-Islam, and other sons. There’s conflict within the regime over that, between the sons and with others there. So you could see disturbances there. Algeria is another example. Again, it has an aging president. He’s already changed the constitution to stay in power up to 2014, and there’s no clear succession.
There has also been a lot of popular protest about food prices and unemployment. So Algeria is vulnerable, but perhaps the memories of their civil war in the 1990s might lead to some restraint amongst the populace.
Looking in the other direction, Yemen clearly, even before this crisis, was the country where one would have expected to see major problems—because of the civil war, because of al Qaeda’s threat there, because of a president hanging on after being in power for a long time, since 1978 in this case, and a son waiting in the wings. So you’d have to put Yemen down on the list of very vulnerable countries.
Finally, among the republics, you’d probably have to mention Syria, where the president, Bashar al-Assad, did in a sense inherit the mantle from his father. But you do have inflation and unemployment there. But I’d say in Syria’s case you also have a slightly more hopeful situation on the economy. They’re coming out of a poorly performing economy and actually doing rather well. So you could say that Bashar al-Assad has his own youth and a slightly better performing economy in his favour.
We’d look at Iran as being potentially vulnerable. We already know that there are many discontented people there. But I think the regime, having squashed the revolution there last year, is in a stronger position.
Among the monarchies you’d say that Jordan is the one most vulnerable. The government has been replaced. But I think that the king has levers of power to suppress any mass opposition. There’s no real sense that it’s a movement against the king; it is against the government. And I think you’d probably say the same in Morocco—again another monarchy.
I think that in the Gulf, the high oil prices of recent years—this crisis of course is going to make those prices go higher—does give governments the option of being able to suppress where necessary, and hand out benefits to keep a lid on discontent.
In sum, it’s a potential volcanic situation across the region. My guess, we may see maybe two or three crises or uprisings of sorts, and how they turn out may depend a little bit on how Egypt turns out.
AR: Do these movements open opportunities for Islamist parties that have hitherto be marginalized from power? If so, what kind of politics might we see developing in their wake? Should we see Turkey’s moderate AKP as the model, or is something more militant likely to emerge. In other words, is revolution something that Western governments with an interest in the Middle East should fear?
DB: I think the fears of a Muslim Brotherhood takeover in Egypt or a general wave of Islamism in the region are overstated. In Egypt, for example, we’ve had a movement that rose out of civil society from secular people who were not necessarily preaching an Islamist ideology. It’s also significant that these movements have coordinated, and worked relatively closely with the Muslim Brotherhood. So if we do get a radical change to the system the Islamists will certainly be involved, but it’s an opportunity for them to recreate themselves.
Now the AKP model in Turkey has been mentioned, and I think it’s useful, it is one which the parties in the region could usefully follow, and indeed some of them have. In Morocco we have a party with the same name as the AKP, but in French. We have a similar accepted party in Algeria. So I’d have thought that you’d see a form of Islamic politics emerging, not exactly the same as in Turkey, but a form of politics that will have to work with secular elements of society. I don’t think Islamist groups are in a position to force themselves, in the sense of a coup, on the remainder of society.
AR: What do events in the Arab world mean for companies with investments there, in both the short mid term?
DB: In the short term we’ll probably see short-term investors, like those holding Egyptian treasury bills, people involved in the carry trade in Egypt, getting out of those markets. But foreign investors who have gone into those countries with a long-term view would have been aware of the risks associated with the Mubarak succession. They went into Egypt with a view to this being an important market, a well-placed market geographically, and there’s no indication yet that any opposition forces are contemplating any backlash against foreign investors as a class. So I think that you might see companies hesitating before going in with new projects there, but those that are already in the market I think will definitely be keen to preserve what they’ve got and to resume their businesses as quickly as possible.
AR: What possible scenarios could emerge in terms of US foreign policy in the Middle East, and how might ongoing events affect the regional balance of power with respect to Israel?
DB: The focus of the US administration and some Western media comment on ‘What does this mean for Israel?’ I think would have been irritating to many Arab viewers, because the ‘revolution’ has not been about Israel. It’s not a demand for Egypt to cancel its peace treaty with Israel and I don’t think anybody would seriously want that to happen, to go back to a state of war. So this is a derivative issue. It’s not the heart of it. The problem is that it’s difficult for old habits of Washington, to put Israel at the centre of their Middle-Eastern policy, to die out. There’s certainly a big battle for the US administration to recover credibility in the region, to chart some sort of policy that’s more responsive to people’s needs. The Obama administration has been very hesitant on the Middle East. It hasn’t been sure whether to push hard on the Israel questions. It’s not been sure about engagement with Iran, or opposition to Iran. And so I think that, until we see evidence to the contrary, we have to have some doubts about the effectiveness of US policy in the region. One footnote though is that, both in Tunisia and Egypt, the assessments of the US diplomats on the ground as revealed through Wikileaks have proved to be remarkably accurate and prescient, and in the long term that may ironically be to the credit of the US.
AR: That’s the end of our discussion today. Thank you, and goodbye.