Cumberland Associates: Personal Observations About Egypt By Peter Alois

Posted By on February 14, 2011

Good read here, it’s a tough and dangrous new world in the Mideast…..

February 14, 2011

Peter Alois is a director of the Global Interdependence Center and one of my colleagues there.  He is retired from the Commercial Service of the U.S. Department of Commerce, where he had many years of experience posted in the Middle East.  He is also president of his own export consulting company. His website is http://www.aloisglobal.com/. www.interdependence.org. 

Until Feb. 11, the situation in Egypt had been unfolding quite routinely. Unanticipated changes in any government move over highly variable time intervals, from: public protest, to government paralysis, to angry but not automatically violent confrontation between the two sides, to a second pause, to low-level violence either between the two or within them, to yet a third pause, and finally to a stabilizing resolution, too often through bloodshed frequently triggered inadvertently by either the public side or the government apparatus. 

Remember the trivial incident in Tunisia in which a local policeman allegedly slapped a street vendor, confiscating his stand? How many times around the world has a cop just smacked someone, and life goes on?  We can only imagine the desperation that caused this individual to set himself on fire, ultimately dying in a hospital. He was truly the human match on the Tunisian and Egyptian gasoline of government incompetence.

One typical yet critical aspect is the violence between the public protesters themselves, as the factions struggle for power against the government. Think of the American, French, and Russian revolutions, where the protesters cannibalized themselves. Freedom yes, but only for me and my supporters. E.g., the Bolsheviks and the Mensheviks, culminating in the assassination of Trotsky in Mexico in 1937, years after the Russian revolution and after Lenin had died in 1924 and been replaced by Stalin.

A second and very modern phenomenon is the hyperactive and instantaneous media coverage.  Literally, we witness live, on-the-spot reporting, with sound and color, from voyeuristic foreign journalists who appear to have no awareness of even where they are standing  We hear towers of misleading babble, cheerfully filling network time.

Returning to Egypt, I am dazzled that to date the developments have played out with minimal violence. Hundreds of thousands of Egyptians have been on the streets, surrounded by troops with tanks. Rocks and Molotov cocktails have been hurled (the latter named in honor of the Soviet Foreign Minister, by protesting Berliners and Hungarians in the ’50s), but stunningly, there was no massive violent put-down by the military.

What’s up with this? Is the Egyptian military ready to cede power to the people? Army General Nasser seized power in 1952 with an associate, Army General Sadat.  Sadat took over in 1970 with the death of Nasser.  Air Force General Mubarak followed in 1981 when Sadat was assassinated. Is democracy led by the military really growing along the Nile?  We shall see.  The army is now back in control of Egypt.  Did they ever really leave?

Certainly any governmental change will reverberate beyond the borders: in Israel, in all ways; in the Suez Canal, with regional economic ramifications; and in the other Islamic countries, in more subtle ways. Egypt has been unique for thousands of years with its sophisticated and elegant culture including: (1) a dramatic brush with apostasy under the heretic Pharaoh Akhnaton, who eliminated traditional beliefs only momentarily, in 1383 B.C., by exchanging multiple gods and goddesses for the single God, Aton;  (2) rule over the eastern Med under various Pharaohs; (3) being the epicenter of European interventions, from the Greeks in Alexandria to the Brits at the Canal (until the USA firmly asked them to depart in 1956); and (4) being an admired model for all Arabs.

Now Egypt is so much more to the entire world; it has become the model for popular revolt and a military’s surrender! As all veterans everywhere know, no military is anything like a democracy. The Financial Times of February 12/13 on page 2 has the headline, “Army takes nation into uncharted territory.” This is somewhat true, but the headline would more appropriately be, “Army finds itself in uncharted territory.”  The dog finally caught the car. Good luck, pal.

It occurs to me that Islam in Egypt may be like Catholicism in Latin America: the folks were doing just fine until foreigners violently forced a new religion onto a pre-existing culture with its own beliefs.  Today, Christianity throughout Latin America is a special blend of Spanish Catholicism and native animism, with hints of modern Protestant evangelicalism.

Islam in Egypt has been traditionally liberal: I have enjoyed beer and wine publicly with Egyptians in open areas, the level of education for both men and women is relatively high.  And women still wear (long) skirts but can have considerable authority. Sexism in the Middle East does continue. Let’s glance at the USA though: liberal, plentiful booze (plus guns), universal though questionable education, skirts, pant-suits, T-shirts, and cut-offs – and sexism is rampant in certain quarters .  And we too have fundamentalists of all religious brands who expect you and me to burn in whatever hell they believe in. 

As for Egypt, I am wondering what the military and the civilian security forces are thinking. My guess is that the government’s official apparatus is growing more fragmented within itself as these titular as well as would-be leaders (generals versus ministers) struggle internally.  They now confront public factions whose wannabe leaders also must be jockeying among themselves (intellectuals, politicians, student council presidents). This is just normal street politics, with the intelligence civilian Omar Suleiman looming with true sphinx-like dignity. (By the way, Mubarak is still inside Egypt.)  Nevertheless, historically, some piece of the security apparatus suddenly acts violently, because it has traditionally held and wielded the authority and the weapons.

The situation deteriorates bloodily until stabilization occurs at the end of a gun and the latest hefe emerges surrounded by uniforms. Throughout the Middle East, leaders and their governmental plus private supporters must be terrified right now. Their collective political failures may shortly be made public in the most appalling of ways.  We are watching that saga unfold in several countries.

The foreign media report what they believe they see, influencing their own governments around the world.  I doubt whether anyone anywhere in any government (including the Egyptians, certainly not the Americans, nor the Israelis) knows what is truly going on.  They can only speculate about who is up and who is down, and in what directions they might take Egypt. That’s not a criticism of the serious people involved.  It is merely a blunt reality check. It is a criticism of the many foreign pundits and politicians who scream for action in Egypt but are truly know-nothings just playing for political points or Nielsen ratings. Those many pauses I mentioned above within the standard revolutionary cycle implied that the real players were taking deep breaths. Foreigners need to do the same with regard to Egypt and the Middle East, and zip it.

Iran and Turkey are theoretical models of evolution, yet they are likely not to apply to the Egyptian reality. The cultures are dramatically different, the personalities are unique to this moment, and the weird and wonderful foreign influences have accumulated over the millennia.

Yet this essentially peaceful blooming of democratic potential is amazing.  It may offer hope for the autocratic Middle East. The venal aristocracies of wealth and power and their front men around the world may fear the coming of spring, with possible germination of the determined seeds of liberty, justice, and opportunity for all. 

In sum, most of us will continue to watch and learn from this ancient civilization, perhaps with opinions modulated but certainly with fingers crossed for the Egyptian people, for their neighbors, and ultimately for ourselves. Are we ready?  

We thank Peter Alois for this guest addition to Cumberland’s website.

David R. Kotok, Chairman and Chief Investment Officer

Copyright 2011, Cumberland Advisors. All rights reserved.

 This report has been derived from information considered reliable, but it cannot be guaranteed as to accuracy or completeness.

 It is not our intention to state or imply in any manner that past results and profitability are an indication of future performance. This does not constitute an offer to sell or the solicitation or recommendation of an offer to buy or sell any securities directly or indirectly herein.

Please feel free to forward this Commentary (with proper attribution) to others who may be interested.

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